Question

On June 1, 2016. Everly Bottle Company sold $3,000,000 in long-term bonds for $2.631,300. The bonds will mature in 10 years and have a stated interest rate of 8% and a yield rate of 10%. The bonds pay Interest annually on May 31 of each year. The bonds are to be accounted for under the effective interest method. Construct a bond amortization table for this problem to indicate the amount of interest expense and discount amortization at each May 31. Credit Cash Debit Interest Expense Credit Bond Discount Carrying Amount of Bonds Date 6/1/16 5/31/17$ 5/31/18 5/31/19 5/31/20 Assuming that interest and discount amortization are recorded each May 31, prepare the adjusting entry to be made on December 31, 2018. (Credit account titles are automatically indented when the amount has entered Do not indent manually. If no entry is required select 'No Entry for the accountitles and enter for the amounts) Debit Credit Date Account Titles and Explanation Dec. 31

Answer 1

Amortization Schedule
Period	Credit cash	Debit interest expense	Credit bond discount	Closing bal.
06/01/2016	0	$0		$2,631,300
05/31/2017	$240,000	$263,130	$23,130	$2,654,430
05/31/2018	$240,000	$265,443	$25,443	$2,679,873
05/31/2019	$240,000	$267,987	$27,987	$2,707,860
05/31/2020	$240,000	$270,786	$30,786	$2,738,646
05/31/2021	$240,000	$273,865	$33,865	$2,772,511
05/31/2022	$240,000	$277,251	$37,251	$2,809,762
05/31/2023	$240,000	$280,976	$40,976	$2,850,738
05/31/2024	$240,000	$285,074	$45,074	$2,895,812
05/31/2025	$240,000	$289,581	$49,581	$2,945,393
05/31/2026	$240,000	$294,606	$54,606	$3,000,000
Entry to be made on 31 Dec. 2018
	Interest expense		$156,326		(267987*7/12)
	Interest payable			$140,000	(240,000*7/12)
	Bond discount			$16,326
	(adjusting entry made on 31 Dec. 18)

If you face any difficulty please let me know in the comment section. please give your valuable feedback.