Question -
The following amortization and interest schedule reflects the issuance of 10-year bonds by Oriole Corporation on January 1, 2011, and the subsequent interest payments and charges. The company's year-end is December 31, and financial statements are prepared once yearly.
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Amortization Schedule
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|
Year
|
Cash
|
Interest
|
Amount Unamortized
|
Carrying Value
|
|
1/1/2011
|
|
|
$37,843
|
$150,657
|
|
2011
|
$20,735
|
$22,599
|
35,979
|
152,521
|
|
2012
|
20,735
|
22,878
|
33,836
|
154,664
|
|
2013
|
20,735
|
23,200
|
31,371
|
157,129
|
|
2014
|
20,735
|
23,569
|
28,537
|
159,963
|
|
2015
|
20,735
|
23,994
|
25,278
|
163,222
|
|
2016
|
20,735
|
24,483
|
21,530
|
166,970
|
|
2017
|
20,735
|
25,046
|
17,219
|
171,281
|
|
2018
|
20,735
|
25,692
|
12,262
|
176,238
|
|
2019
|
20,735
|
26,436
|
6,561
|
181,939
|
|
2020
|
20,735
|
27,296
|
|
188,500
|
(a) Indicate whether the bonds were issued at a premium or a discount.
(b) Indicate whether the amortization schedule is based on the straight - line method or the effective - interest method.
(c) Determine the stated interest rate and the effective-interest rate.
(d) On the basis of the schedule above, prepare the journal entry to record the issuance of the bonds on January 1, 2011.
(e) On the basis of the schedule above, prepare the journal entry to reflect the bond transactions and accruals for 2011. (Interest is paid January 1.)
(f) 0n the basis of the schedule above, prepare the journal entries to reflect the bond transactions and accruals for 2018. Oriole Corporation does not use reversing entries.