The following amortization and interest schedule reflects the issuance of 10-year bonds by Capulet Corporation on January 1, 2019, and the subsequent interest payments and charges. The company’s year-end is December 31, and financial statements are prepared once yearly.

Instructions

a. Indicate whether the bonds were issued at a premium or a 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 effectiveinterest 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 the schedule above, prepare the journal entry to record the issuance of the bonds on January 1, 2019.

e. On the basis of the schedule above, prepare the journal entry or entries to record 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 record the bond transactions and accruals for 2026. Capulet Corporation does not use reversing entries.

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Year 1/1/2019 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 Cash $11,000 11,000 11,000 11,000 11,000 11,000 11,000 11,000 11,000 11,000 Amortization Schedule Interest Amount Unamortized $5,651 5,329 $11,322 11,361 11,404 11,452 11,507 11,567 11,635 11,712 11,797 11,894 4,968 4,564 4,112 3,605 3,038 2,403 1,691 894 Carrying Value $94,349 94,671 95,032 95,436 95,888 96,395 96,962 97,597 98,309 99,106 100,000