In each of the following independent cases, the company closes its books on December 31.
Cheyenne Co. sells $495,000 of 10% bonds on March 1, 2017. The bonds pay interest on September 1 and March 1. The due date of the bonds is September 1, 2020. The
bonds yield 12%.
Prepare a bond amortization schedule using the effective-interest method for discount and premium amortization. Amortize premium or discount on interest dates and at
year-end. (Round answers to 0 decimal places, e.g. 38,548.)
Schedule of Bond Discount Amortization
Effective-Interest Method
Bonds Sold to Yield
Date
Cash
Paid
3/1/17
9/1/17
3/1/18
9/1/18
3/1/19
9/1/19
3/1/20
9/1/20
Interest
Expense
Discount
Amortized
Carrying
Amount of
Bonds
$
Prepare all of the relevant journal entries from the time of sale until the date indicated. (Assume that no reversing entries were made.) (Round present value factor
calculations to 5 decimal places, e.g. 1.25124 and the final answer to 0 decimal places e.g. 58,971. 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.)
