Exercise 10-24 (Part Level Submission) Sheridan Company receives $385,000 when i

Question

Exercise 10-24 (Part Level Submission) Sheridan Company receives $385,000 when it issues a s385,000, 7% mortgage note payable to finance the construction of a building at December 31, 2017. The terms provide for annual installment payments of $42,271 on December 31 (a) Prepare the schedule using effective-interest method to amortize bond premium or discount of Sheridan Company. (Round ansivers to o decimal places, e.g. 5,275.) Annual Interest Cash Payment Interest Reduction of Princip Bala Principal Issue date 12/31/18 12/31/19

Explanation / Answer

Interest period Cash payment Interest expense Reduction of principal Principal balance issue date 385000 12/31/18 42271 26950 15321 369679 12/31/19 42271 25878 16393 353286 10-21 Dec-31-2017 Interest expense 43368         Discount on bonds payable 1248          Cash 42120 =468000*9%

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