Presented below are selected transactions on the books of Bridgeport Corporation. May 1, 2017 Bonds payable with a par value of $986,400, which are dated January 1, 2017, are sold at 107 plus accrued interest. They are coupon bonds, bear interest at 12% (payable annually at January 1), and mature January 1, 2027. (Use interest expense account for accrued interest.) Dec. 31 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.) Jan. 1, 2018 Interest on the bonds is paid. April 1 Bonds with par value of $394,560 are called at 101 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.
|May 1, 2017||Cash||1094904|
|Premium on bond payable||69048|
|(To record the sale of bond)|
|Dec 31, 2017||Interest expense|
|4762 (69048*8month/116 month)|
|(To record amortisation of premium)|
|Jan 1, 2018||Interest payable||78912|
|April 1, 2018||Bonds payable||394560|
|Premium on bond payable||25218|
|Gain on redemption||17327|
|Dec 31, 2018||Interest expense||82858|
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