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Homework answers / question archive / On January 1, 2020, Sarasota Company purchased 8% bonds having a maturity value of $280,000, for $303,589

On January 1, 2020, Sarasota Company purchased 8% bonds having a maturity value of $280,000, for $303,589

Accounting

On January 1, 2020, Sarasota Company purchased 8% bonds having a maturity value of $280,000, for $303,589.66. The bonds provide the bondholders with a 6% yield. They are dated January 1, 2020, and mature January 1, 2025, with interest received on January 1 of each year. Sarasota Company uses the effective-interest method to allocate unamortized discount or premium. The bonds are classified in 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 are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

Date

Account Titles and Explanation

Debit

Credit

Jan. 1, 2020

enter an account title to record the transaction on January 1, 2020

enter a debit amount

enter a credit amount

 

enter an account title to record the transaction on January 1, 2020

enter a debit amount

enter a credit amount

Prepare a bond amortization schedule. (Round answers to 2 decimal places, e.g. 2,525.25.)

Schedule of Interest Revenue and Bond Premium Amortization
Effective-Interest Method


Date

 

Cash
Received

 

Interest
Revenue

 

Premium
Amortized

 

Carrying Amount
of Bonds

 

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

 

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

 

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

 

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

 

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

 

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

Prepare the journal entry to record the interest revenue and the amortization at December 31, 2020. (Round answers to 2 decimal places, e.g. 2,525.25. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

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

 

enter an account title to record the transaction on December 31, 2020

enter a debit amount

enter a credit amount

 

enter an account title to record the transaction on December 31, 2020

enter a debit amount

enter a credit amount

Prepare the journal entry to record the interest revenue and the amortization at December 31, 2021. (Round answers to 2 decimal places, e.g. 2,525.25. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

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

 

enter an account title to record the transaction on December 31, 2021

enter a debit amount

enter a credit amount

 

enter an account title to record the transaction on December 31, 2021

enter a debit amount

enter a credit amount

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