i need help solving this problem please Problem 146 Presente

i need help solving this problem please!

Problem 14-6 Presented below are selected transactions on the books of Tamarisk Corporation May 1, 2017 Bonds payable with a par value of $861,600, which are dated January 1, 2017, are sold at 106 plus accrued interest. They are coupon bonds, bear interest at 11% (payable annually at January 1), and mature January 1, 2027. (Use interest expense account for accrued interest.) Adjusting entries are made to record the accrued interest on the bonds, and the amortization of the proper amount of premium. (Use straight-line amortization.) Dec. 31 Jan. 1, 2018 Interest on the bonds is paid. April 1 Bonds with par value of $344,640 are called at 102 plus accrued interest, and redeemed. (Bond premium is to be amortized only at the end of each year.) Dec. 31 Adjusting entries are made to record the accrued interest on the bonds, and the proper amount of premium amortized Prepare journal entries for the transactions above. (Round intermediate calculations to 6 decimal places, e.g. 1.251247 and final answers to o decimal places, e.g. 38,548. If no entry is required, select \"No Entry\" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.)

Solution

Journal entries Calculation Date Account Titles and Explanation Debit Credit May 1,2017 Cash $944,888 Interest accrued as on May.1,2017 = $861600*11%*(4 months/12 months) = $31,592 Bonds Payable $861,600 Premium on Bonds Payable May.1,2017 = [$861600*106%] - $861600 = $51,696 Premium on Bonds Payable $51,696 Interest Expense $31,592 (to record sale of bonds) Dec.31,2017 Interest Expense $94,776 Interest expense Dec.31,2017 = $861600*11% = $94,776 Interest Payable $94,776 (to record interest due) Premium on Bonds Payable $5,170 Premium on bonds amortization using straight line method = $51696 / 10 years = $5169.60 Interest Expense $5,170 (to amortize the premium) Jan.1,2018 Interest Payable $94,776 Cash $94,776 April.1,2018 Bonds Payable $344,640 Premium on Bonds Payable $18,611 Premium on Bonds Payable = ($51696 -$5170)*($344640/$861600) = $18610.56 Interest Expense $9,478 Interest accrued as on April.1,2018 = $344640*11%*(3 months/12 months) = $9,477.60 Cash $361,010 Cash Payment on redemption of bonds = =($344640*102%)+$9478 = $3,61,010 Gain on Redemption of Bonds $11,718 Dec.31,2018 Interest Expense $56,866 Interest expense Dec.31,2018 = ($861600-$344640) *11% = $56,866 Interest Payable $56,866 (to record interest due) Premium on Bonds Payable $3,102 Premium on Bonds Payable = ($51696 -$18611 - $5170)/9 years = $3101.76 Interest Expense $3,102 (to amortize the premium)