The following amortization and interest schedule reflects the issuance of 10 year bonds by CMA Corporation on January 1, 2019, and the subsequent interest payment and charges. The Company’s year end is December 31, and the financial statements are prepared once yearly. Instructions: (a) Indicate whether the bonds were issued at a premium or 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 schedule above, prepare the journal entry to record the issuance of bonds on January 1, 2019 (e) On the basis of the schedule above, prepare the journal entry or entries to reflect the bond transactions and accruals for 2019. (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 2019. CMA Corporation does not use reversing entries.
The following amortization and interest schedule reflects the issuance of 10 year bonds by CMA Corporation on January 1, 2019, and the subsequent interest payment and charges. The Company’s year end is December 31, and the financial statements are prepared once yearly.
Instructions:
(a) Indicate whether the bonds were issued at a premium or discount and how you can determine this fact from the schedule.
(b) Indicate whether the amortization schedule is based on the
(c) Determine the stated interest rate and the effective interest rate.
(d) On the basis of schedule above, prepare the
(e) On the basis of the schedule above, prepare the journal entry or entries to reflect the bond transactions and accruals for 2019. (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 2019. CMA Corporation does not use reversing entries.
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