Perez Corporation pays $47,000 into a bond sinking fund each year for the future redemption of bonds. During the first year, the fund earns $3,825. When the bonds mature, there is a balance in the sinking fund of $417,000, of which $400,000 is used to redeem the bonds.

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

Question

Perez Corporation pays $47,000 into a bond sinking fund each year for the future redemption of bonds. During the first year, the fund earns $3,825. When the bonds mature, there is a balance in the sinking fund of $417,000, of which $400,000 is used to redeem the bonds.
​
Required:
Prepare the following general journal entries.
a.
The initial sinking fund deposit.
b.
The first year's interest for the sinking fund.
c.
The redemption of the bonds.
d.
The return of excess cash to the corporation.

Quizplus · Accepted Answer

The Answer of Perez Corporation pays $47,000 into a bond sinking fund each year for the future redemption of bonds. During the first year, the fund earns $3,825. When the bonds mature, there is a balance in the sinking fund of $417,000, of which $400,000 is used to redeem the bonds.
​
Required:
Prepare the following general journal entries.
a.
The initial sinking fund deposit.
b.
The first year's interest for the sinking fund.
c.
The redemption of the bonds.
d.
The return of excess cash to the corporation.

Perez Corporation Pays $47,000 into a Bond Sinking Fund Each