Problem 146 Presented below are selected transactions on the

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 1196 (payable annually at January 1), and mature January 1, 2027, (Use interest expense account for accrued interest.) amortization.) 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. 31Adjusting entries are made to record the accrued interest on the bonds, and the amortization of the proper amount of premium. (Use straight-line Jan. 1, 2018 Interest on the bonds is paid April 1 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 O for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually) Date Account Titles and Explanation Debit Credit (To record the interest)

Solution

Journal Entry Date Particulars Dr. Amt. Cr. Amt. 1-May-17 Cash    944,888.00 $861,600 X 106% + ($861,600 X 11% X 4/12) Bonds Payable    861,600.00 Premium on Bonds Payable      51,696.00 $861,600 X 6% Interest Expense      31,592.00 $861,600 X 11% X 4/12 (record the issue of bonds) 31-Dec-17 Interest Expense      94,776.00 $861,600 X 11% Interest Payable      94,776.00 (Record the interest) 31-Dec-17 Premium on Bonds Payable        3,565.00 $51,696 X 8/116 Interest Expense        3,565.00 $51,696 X 8/116 (To amortize premium) 1-Jan-18 Interest Payable      94,776.00 Cash      94,776.00 (record the interest paid) 1-Apr-18 Bonds Payable    344,640.00 Premium on Bonds Payable      18,718.00 $51,696 X ($344,640 / $861,600) X (105/116) Interest Expense        9,478.00 $344,640 X 11% X 3/12 Cash    361,011.00 $344,640 X 102% + 9,478 Gain on Redemption of Bonds      11,825.00 31-Dec-18 Interest Expense      56,866.00 ($861,600 - $344,640) X 11% Interest Payable      56,866.00 (Record the interest) 31-Dec-18 Premium on Bonds Payable        3,744.00 ($51,696 X 12/116 X 0.60) + ($51,696 X 3/116 X 0.40) Interest Expense        3,744.00 $51,696 X 8/116 (To amortize premium)