Question

On January 1, 2017, Bramble Company issued $ 1,820,000 face value,  7%,  10-year bonds at $ 1,953,954. This price resulted in a  6% effective-interest rate on the bonds. Bramble uses the effective-interest method to amortize bond premium or discount. The bonds pay annual interest on each January 1.

Prepare the journal entries to record the following transactions. (Round answers to 0 decimal places, e.g. 125. Credit account titles are automatically indented when amount is entered. Do not indent manually.)

1.		The issuance of the bonds on January 1, 2017.
2.		Accrual of interest and amortization of the premium on December 31, 2017.
3.		The payment of interest on January 1, 2018.
4.		Accrual of interest and amortization of the premium on December 31, 2018.

No.	Date	Account Titles and Explanation	Debit	Credit
1.	Jan. 1, 2017	enter an account title to record the issuance of the bonds on January 1, 2017	enter a debit amount	enter a credit amount
		enter an account title to record the issuance of the bonds on January 1, 2017	enter a debit amount	enter a credit amount
		enter an account title to record the issuance of the bonds on January 1 , 2017	enter a debit amount	enter a credit amount
2.	Dec. 31, 2017	enter an account title to record accrual of interest and amortization of the premium on December 31, 2017	enter a debit amount	enter a credit amount
		enter an account title to record accrual of interest and amortization of the premium on december 31, 2017	enter a debit amount	enter a credit amount
		enter an account title to record accrual of interest and amortization of the premium on december 31, 2017	enter a debit amount	enter a credit amount
3.	Jan. 1, 2018	enter an account title to record the payment of interest on January 1 ,2018	enter a debit amount	enter a credit amount
		enter an account title to record the payment of interest on January 1 , 2018	enter a debit amount	enter a credit amount
4.	Dec. 31, 2018	enter an account title to record accrual of interest and amortization of the premium on December 31,2018	enter a debit amount	enter a credit amount
		enter an account title to record accrual of interest and amortization of the premium on December 31, 2018	enter a debit amount	enter a credit amount
		enter an account title to record accrual of interest and amortization of the premium on December 31, 2018	enter a debit amount	enter a credit amount

eTextbook and Media

List of Accounts

Show the proper long-term liabilities balance sheet presentation for the liability for bonds payable at December 31, 2018. (Round answers to 0 decimal places, e.g. 125.)

BRAMBLE COMPANY Balance Sheet (Partial) choose the accounting periodchoose the accounting period  For the Month Ended December 31, 2018December 31, 2018For the Year Ended December 31, 2018
select an opening subsection nameselect an opening subsection name  Current AssetsCurrent LiabilitiesIntangible AssetsLong-term InvestmentsLong-term LiabilitiesProperty, Plant and EquipmentStockholders' EquityTotal AssetsTotal Current AssetsTotal Current LiabilitiesTotal Intangible AssetsTotal LiabilitiesTotal Liabilities and Stockholders' EquityTotal Long-term InvestmentsTotal Long-term LiabilitiesTotal Property, Plant and EquipmentTotal Stockholders' Equity
enter a balance sheet item		$ enter a dollar amount
select between addition and deductionselect between addition and deduction  AddLess:  enter a balance sheet item		enter a dollar amount		$ enter a total of the two previous amounts

eTextbook and Media

List of Accounts

Provide the answers to the following questions.

1. What amount of interest expense is reported for 2018? (Round answer to 0 decimal places, e.g. 125.)

Interest expense to be reported

$ enter Interest expense in dollars

2. The bond interest expense reported in 2018 would be  select an optionselect an option  greater thanless thansame as the amount that would be reported if the straight-line method of amortization were used.

Answer 1

Date	Account titles and Explantion					Debit	Credit
1/1/2017	cash					1,953,954
	premium on bonds						133,954
	bonds payable						1,820,000
	Schedule of interest expense and bond premium amortization
		Effective interest Method
	Cash	interest	premium	Carrying amt
	paid	expense	amortized	of bonds
1/1/2017				1,953,954
12/31/2017	127400	117237	10163	1943791
12/31/2018	127,400	116627	10773	1933019
12/31/2019	127,400	115981	11419	1921600
Date	Account titles & explanations					Debit	Credit
12/31/2017	interest expense					117,237
	premium on bonds					10163
	interest payable						127400
1/1/2018	interest payable					127400
	cash						127400
12/31/2018	interest expense					116,627
	premium on bonds					10773
	interest payable						127,400
	Balance sheet (partial)
	current liablities
	interest payable					127,400
	long term liabilities
	Bonds payable				1,820,000
	Add:Premium on bonds payabke				113,019	1,933,019
1)	amount of interest expense to be reported for 2018					116,627
2)	Greater