ACG 3113 Week 9 Team Work Updated
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ACG 3113 Week 9 Team Work Updated
P14-1 (Analysis of Amortization Schedule and Interest Entries) The following amortization and interest schedule reflects the issuance of 10-year bonds by Capulet Corporation on January 1, 2008, and the subsequent
interest payments and charges. The company’s year end is December 31, and financial statements are prepared once yearly.
Amortization Schedule
Amount
Carrying
Year
Cash
Interest
Unamortized
Value
01.01.08
$5 651
$94 349
2008
$11 000
$11 322
5 329
94 671
2009
11 000
11 361
4 968
95 032
2010
11 000
11 404
4 564
95 436
2011
11 000
11 452
4 112
95 888
2012
11 000
11 507
3 605
96 395
2013
11 000
11 567
3 038
96 962
2014
11 000
11 635
2 403
97 597
2015
11 000
11 712
1 691
98 309
2016
11 000
11 797
894
99 106
2017
11 000
11 894
100 000
Instructions: a) Indicate whether the bonds were issued at a premium or a discount and how you can determine this fact from the schedule.
b) Indicate whether the amortization schedule is based on the straight-line method or the effective-interest method, and how you can determine which method is used.
c) Determine the stated interest rate and the effective-interest rate.
d) On the basis of the schedule above, prepare the journal entry to record the issuance of the bonds on January 1, 2008.
e) On the basis of the schedule above, prepare the journal entry or entries to reflect the bond transactions and accruals for 2008. (Interest is paid January 1.)
f) On the basis of the schedule above, prepare the journal entry or entries to reflect the bond transactions and accruals for 2015. Capulet Corporation does not use reversing entries.