On January 1, 2019, Gates Corporation issued $100,000 of 5-year bonds due December 31, 2023, for $103,604.79 minus debt issuance costs of $3,000. The bonds carry a stated rate of interest of 13% payable annually on December 31 and were issued to yield 12%. The company uses the effective interest method of amortization to amortize any discounts or premiums and the straight-line
On January 1, 2019, Gates Corporation issued $100,000 of 5-year bonds due December 31, 2023, for $103,604.79 minus debt issuance costs of $3,000. The bonds carry a stated rate of interest of 13% payable annually on December 31 and were issued to yield 12%. The company uses the effective interest method of amortization to amortize any discounts or premiums and the straight-line method to amortize the debt issuance costs.
Required:
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Prepare the Journal 2019 has 10 lines Journal 2020 has 5 lines Journal 2021 has 5 lines Journal 2022 has 5 line Journal 2023 has 7 lines |
. Prepare a bond interest expense and premium amortization schedule for the bonds.
Amortization Schedule Instructions
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GATES CORPORATION |
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Bond Interest Expense and Premium Amortization Schedule |
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Effective Interest Method 13% Bonds Sold to Yield 12% |
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1 |
Date |
Cash Credit |
Interest Expense Debit |
Unamortized Premium Debit |
Book |
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2 |
01/01/19 |
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3 |
12/31/19 |
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4 |
12/31/20 |
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5 |
12/31/21 |
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6 |
12/31/22 |
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7 |
12/31/23 |
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