City Slicker Corporation pays $55,000 into a bond sinking fund each year for the future redemption of bonds. During the first year, the fund earns $1,475. When the bonds mature, there is a sinking fund balance of $612,000, and $600,000 is needed to redeem the bonds.

Required:
Prepare the following general journal entries.
a.
The initial sinking fund deposit.
b.
The first year's earnings.
c.
The redemption of the bonds.
d.
The return of excess cash to the corporation.

Question

City Slicker Corporation pays $55,000 into a bond sinking fund each year for the future redemption of bonds. During the first year, the fund earns $1,475. When the bonds mature, there is a sinking fund balance of $612,000, and $600,000 is needed to redeem the bonds.
​
Required:
Prepare the following general journal entries.
a.
The initial sinking fund deposit.
b.
The first year's earnings.
c.
The redemption of the bonds.
d.
The return of excess cash to the corporation.

Quizplus · Accepted Answer

The Answer of City Slicker Corporation pays $55,000 into a bond sinking fund each year for the future redemption of bonds. During the first year, the fund earns $1,475. When the bonds mature, there is a sinking fund balance of $612,000, and $600,000 is needed to redeem the bonds.
​
Required:
Prepare the following general journal entries.
a.
The initial sinking fund deposit.
b.
The first year's earnings.
c.
The redemption of the bonds.
d.
The return of excess cash to the corporation.

City Slicker Corporation Pays $55,000 into a Bond Sinking Fund