On January 1, 2013, Gates Corporation issued $100,000 of 5-year bonds due December 31, 2017, for $103,604.79

Question:

On January 1, 2013, Gates Corporation issued $100,000 of 5-year bonds due December 31, 2017, for $103,604.79 minus bond issue costs of $3,000. The bonds carry a stated rate of interest of 13% payable annually on December 31 and were issued to yield 12%. The company uses the effective interest method of amortization.

Required:

Prepare the journal entries to record the issuance of the bonds, all the interest payments, premium amortizations, bond issue cost amortizations, and the repayment of the bonds. In addition, prepare a bond interest expense and premium amortization schedule for the bonds.

Corporation
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may...