On January 1, 2020, Sarasota Company purchased 8% bonds having amaturity value of $280,000, for $303,589.66. The bonds provide thebondholders with a 6% yield. They are dated January 1, 2020, andmature January 1, 2025, with interest received on January 1 of eachyear. Sarasota Company uses the effective-interest method toallocate unamortized discount or premium. The bonds are classifiedin the held-to-maturity category.
Prepare the journal entry at the date of the bond purchase.(Enter answers to 2 decimal places, e.g.2,525.25. Credit account titles areautomatically indented when amount is entered. Do not indentmanually. If no entry is required, select "No Entry" for theaccount titles and enter 0 for theamounts.)
Date | Account Titles and Explanation | Debit | Credit |
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Jan. 1, 2020 | enter an account title to record the transaction on January 1,2020 | enter a debit amount | enter a credit amount |
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| enter an account title to record the transaction on January 1,2020 | enter a debit amount | enter a credit amount |
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Prepare a bond amortization schedule. (Round answersto 2 decimal places, e.g. 2,525.25.)
Schedule of Interest Revenue and Bond PremiumAmortization
Effective-Interest Method |
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Date
| | Cash
Received | | Interest
Revenue | | Premium
Amortized | | Carrying Amount
of Bonds | |
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1/1/20 | | $enter a dollar amount rounded to 2 decimal places | | $enter a dollar amount rounded to 2 decimal places | | $enter a dollar amount rounded to 2 decimal places | | $enter a dollar amount rounded to 2 decimal places | |
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1/1/21 | | enter a dollar amount rounded to 2 decimal places | | enter a dollar amount rounded to 2 decimal places | | enter a dollar amount rounded to 2 decimal places | | enter a dollar amount rounded to 2 decimal places | |
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1/1/22 | | enter a dollar amount rounded to 2 decimal places | | enter a dollar amount rounded to 2 decimal places | | enter a dollar amount rounded to 2 decimal places | | enter a dollar amount rounded to 2 decimal places | |
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1/1/23 | | enter a dollar amount rounded to 2 decimal places | | enter a dollar amount rounded to 2 decimal places | | enter a dollar amount rounded to 2 decimal places | | enter a dollar amount rounded to 2 decimal places | |
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1/1/24 | | enter a dollar amount rounded to 2 decimal places | | enter a dollar amount rounded to 2 decimal places | | enter a dollar amount rounded to 2 decimal places | | enter a dollar amount rounded to 2 decimal places | |
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1/1/25 | | enter a dollar amount rounded to 2 decimal places | | enter a dollar amount rounded to 2 decimal places | | enter a dollar amount rounded to 2 decimal places | | enter a dollar amount rounded to 2 decimal places |
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Prepare the journal entry to record the interest revenue and theamortization at December 31, 2020. (Round answers to 2decimal places, e.g. 2,525.25. Credit account titles areautomatically indented when amount is entered. Do not indentmanually. If no entry is required, select "No Entry" for theaccount titles and enter 0 for theamounts.)
Date | Account Titles and Explanation | Debit | Credit |
|---|
Dec. 31, 2020 | enter an account title to record the transaction on December 31,2020 | enter a debit amount | enter a credit amount |
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| enter an account title to record the transaction on December 31,2020 | enter a debit amount | enter a credit amount |
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| enter an account title to record the transaction on December 31,2020 | enter a debit amount | enter a credit amount |
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Prepare the journal entry to record the interest revenue and theamortization at December 31, 2021. (Round answers to 2decimal places, e.g. 2,525.25. Credit account titles areautomatically indented when amount is entered. Do not indentmanually. If no entry is required, select "No Entry" for theaccount titles and enter 0 for theamounts.)
Date | Account Titles and Explanation | Debit | Credit |
|---|
Dec. 31, 2021 | enter an account title to record the transaction on December 31,2021 | enter a debit amount | enter a credit amount |
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| enter an account title to record the transaction on December 31,2021 | enter a debit amount | enter a credit amount |
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| enter an account title to record the transaction on December 31,2021 | enter a debit amount | enter a credit amount |
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