issuance of bonds between interest dates straight line retirement presented below a 577942

May1,2012

Bonds payable with a par value of $900,000, which are dated January 1, 2012, are sold at 106 plus accrued interest. They are coupon bonds, bear interest at 12% (payable annually at January 1), and mature January 1, 2022.

Dec. 31

Adjusting entries are made to record the accrued interest on the bonds, and the amortization of the proper amount of premium.

Jan.1, 2013

Interest on the bonds is paid.

April 1

Bonds with par value of $360,000 are called at 102 plus accrued interest, and retired. (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.