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(Analysis of Amortization Schedule and Interest Entries)

The following amortization and interest schedule reflects the issuance of 10-year bonds by Capulet Corporation on January 1, 2006, and the subsequent interest payments and charges. The company's year-end is December 31, and financial statements are prepared once yearly.

Amortization Schedule
Year	Cash	Interest	Amount Unamortized	Book Value
1/1/2006	$16,280				$8,362	$139,638
2006	16,280		$16,757		7,885	140,115
2007	16,280		16,814		7,351	140,649
2008	16,280		16,878		6,753	141,247
2009	16,280		16,950		6,083	141,917
2010	16,280		17,030		5,333	142,667
2011	16,280		17,120		4,493	143,507
2012	16,280		17,221		3,552	144,448
2013	16,280		17,334		2,498	145,502
2014	16,280		17,460		1,318	146,682
2015	16,280		17,598			148,000

Indicate whether the bonds were issued at a premium or a discount?

Is the amortization schedule based on the straight-line method or the effective interest method?

Determine the stated interest rate and the effective interest rate.

Stated Rate	%
Effective Rate	%

On the basis of the schedule above, prepare the journal entry to record the issuance of the bonds on January 1, 2006. (List multiple debit/credit entries from largest to smallest amount, e.g. 10, 5, 2.)

Date	Description/Account	Debit	Credit
01/01/06

On the basis of the schedule above, prepare the journal entry or entries to reflect the bond transactions and accruals for 2006. (Interest is paid January 1.) (List multiple debit/credit entries from largest to smallest amount, e.g. 10, 5, 2.)

Date	Description/Account	Debit	Credit
12/31/06

On the basis of the schedule above, prepare the journal entry or entries to reflect the bond transactions and accruals for 2013. Capulet Corporation does not use reversing entries. (List multiple debit/credit entries from largest to smallest amount, e.g. 10, 5, 2.)

Date	Description/Account	Debit	Credit
01/01/13

12/31/13

Discount

Effective interest