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 $916,800, 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 $366,720 are called at 102 plus accrued interest, and redeemed. (Bond premium is to be amortized only at the end of each year.) Adjusting entries are made to record the accrued interest on the bonds, and the proper amount of premium Dec. 31 amortized Prepare journal entries for the transactions above. (Round intermediate calculations to 6 decimal places, e.g. 1.251247 and final answers to 0 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.) Date Account Titles and Explanation Debit Credit May 1, 2017 Cash 1005424 Bonds Payable Premium on Bonds Payable Interest Expense 916800 55624 33000

Solution

Sale proceeds:

Buyback of bonds workings:

2018

Year	date	Account	Debit	Credit
2017	May.1	Cash	10,05,424
		Bonds payable		9,16,800
		Premium on bonds payable		55,008
		Interest expense		33,616
2017	Dec.31	Interest expense	1,00,848.00
		Interest payable		100848
2017	Dec.31	Premium on bonds payable	5,500.80
		Interest expense		5,500.80
2018	Jan.1	Interest payable	100848
		Cash		100848
2018	Apr.1	bonds payable	3,66,720
		Premium on bonds payable	19,802.88
		Interest expense	10,084.80
		Cash		3,84,139.20
		gain on redemption of debt		12,468.48
2018	Dec.31	Interest expense	60,508.80
		Interest payable		60,508.80
2018	Dec.31	Premium on bonds payable	3,300.48
		Interest expense		3,300.48