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On October 1, 2015, Brimstone Company sold 12% bonds having a maturity value of $800,000 for...

On October 1, 2015, Brimstone Company sold 12% bonds having a maturity value of $800,000 for $853,382 plus accrued interest, which provides the bondholders with a 10% yield. The bonds are dated January 1, 2015, and mature January 1, 2020, with interest payable December 31 of each year. Prepare the journal entries at the date of the bond issuance and for the first interest payment.
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Date Account Debit Credit
Oct 1 2015 Cash $       853,382
     Premium on Bond Payable $     53,382
     Bond Payable $   800,000
(To record issuance of bond)
Dec 31 2015 Interest Expense ($853,382*10%*3/12) $         21,335
Premium on Bond Payable $           2,665
     Cash ($800,000*12%*3/12) $     24,000
(To record payment of interest)
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