On December 31 of the current year, Palus Inc. issued $500,000 of 10-year, 11% bonds. The bond were dated December 31 of the same year. Interest on the bond is payable on June 30 and Dec 31 of each year.
Instructions:
Record the following transactions. (Omit explanations and round to the nearest dollar.)
1) The bonds were sold for $531,161 on December 31 of the current year. The market rate of interest on this date was 10%.
2) Interest was paid on June 30, and the related amount of bond premium was amortized, based on straight line method.
3) Interest was paid in December 31, and the related amount of bond premium was amortized, based on the straight-line method.
4) On December 31 (bond are one year old), one half of the bonds were redeemed at 103.