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(Entriesfor Bond Transactions—Effective Interest Method) Digital Companyissued $600,000
of 9.7705% 20 -year bonds onJanuary 1, 2014, at 102
Interest is payable semiannually on July 1 and January 1. DigitalCompany uses the effective-interest method of amortization for bondpremium or discount.
Instructions: make journal entrys and showformulas
Prepare thejournal entries to record the following.
(a) Theissuance of the bonds.
Jan 1, 14 Account Title Formula
Account Title Amount
Account Title Amount
(b) Thepayment of interest and related amortization on July 1,2014.
Jul 1, 14 Account Title Formula
Account Title Formula
Account Title Formula
(c) Theaccrual of interest and the related amortization on December 31,2014.
Dec 31, 14 Account Title Formula
Account Title Formula
Account Title Formula
Carrying amount ofbonds at July 1, 2014:
Text title Formula
Text title Formula
Text title Formula

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Beverley Smith
Beverley SmithLv2
28 Sep 2019

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(Entries for BondTransactions—Straight-Line) Digital Company issued$600,000
of 10% 20 -year bonds on January 1, 2014, at 102
Interest is payable semiannually onJuly 1 and January 1. Digital Company uses the straight-line methodof amortization for bond premium or discount.
Instructions: make journal entrys andshow formulas
Prepare the journal entries to record thefollowing.
(a) The issuance of thebonds.
Jan 1, 14 Account Title Amount
Account Title
Account Title
(b) The payment of interest and relatedamortization on July 1, 2014.
Jul 1, 14 Account Title Formula
Account Title Formula
Account Title
(c) The accrual of interest and the relatedamortization on December 31, 2014.
Dec 31, 14 Account Title Formula
Account Title Formula
(Comprehensive Bond Problem)
Prepare the journal entries related to the sale of bonds and subsequent payments on those bonds. Also prepare the year-end accrual of interest expense.
1. Sanford Co. sells $500,000 of 10% bonds on March 1, 2014. The
bonds pay interest on September 1 and March 1. The due date of the bonds is September 1, 2017.
The bonds yield 12% Give the entries through December 31, 2015.
A) Prepare the Bond Discount Amortization Table
Schedule of Bond Discount Amortization
Effective Interest Method
10% Bonds Sold to Yield 12%
Amortization Carrying
Cash Interest of Bond Value
Date Paid Interest Expense Discount of Bonds
Mar 1, 14 Amount
Sep 1, 14 Formula Formula Formula Formula
Mar 1, 15 Formula Formula Formula Formula
Sep 1, 15 Formula Formula Formula Formula
Mar 1, 16 Formula Formula Formula Formula
Sep 1, 16 Formula Formula Formula Formula
Mar 1, 17 Formula Formula Formula Formula
Sep 1, 17 Formula Formula Formula Formula
B) Prepare journal entry to record issuance of the bond on March 1, 2014
Mar 1, 14 Account Title Amount
Account Title Amount
Account Title Amount
C) Prepare the journal entry to record the first payment of bond interest on September 1.
Sep 1, 14 Account Title Amount
Account Title Amount
Account Title Amount
D) Prepare the journal entry to reord the accrual of interest at December 31. Assume that no prior accruals have been made.
Dec 31, 14 Account Title Amount
Account Title Amount
Account Title Amount
Note: Amortization table is semi-annual, interest rate is stated as annual value.
E) Prepare the journal entry for the March 1, payment of interest. Assume that no additional accruals
have been made since December and no reversing entry was made at December.
Mar 1, 15 Account Title Amount
Account Title Amount
Account Title Amount
Account Title Amount
F) Prepare the journal entry to record the payment of bond interest on September 1.
Sep 1, 15 Account Title Amount
Account Title Amount
Account Title Amount
G) Prepare the journal entry to record the accrual of interest at December 31.
Dec 31, 15 Account Title Amount
Account Title Amount
Account Title Amount
See also tabs on payroll and goodwill

Bonita Company issued $672,000 of 10%, 20-year bonds on January 1, 2017, at 102. Interest is payable semiannually on July 1 and January 1. Bonita Company uses the effective-interest method of amortization for bond premium or discount. Assume an effective yield of 9.7705%.

Prepare the journal entries to record the following. (Round intermediate calculations to 6 decimal places, e.g. 1.251247 and final answer to 0 decimal places, e.g. 38,548. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.)

(a)The issuance of the bonds.(b)The payment of interest and related amortization on July 1, 2017.(c)The accrual of interest and the related amortization on December 31, 2017.

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