On June 1, Ryan, Inc., whose fiscal year is the calendar year, issued $12,000,000 of 20-year, 9 percent bonds, dated June 1, with interest pay¬

able on June 1 and December 1. The following transactions pertain to the bond issue for the first two years:

Instructions 1. Record the transactions in general journal form.
2. Post entries to the Interest Expense account and the Premium on Bonds Pay¬
able account. Label the adjusting, closing, and reversing entries.

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Year 1 June 1 Sold the bond issue at 101. Dec. 1 Paid semiannual interest on bonds. Year 2 Jan. 31 Deposited $237,000 in a bond sinking fund. 31 Recorded adjusting entry for accrued interest payable. 31 Recorded adjusting entry for amortization of bond premium. Closed the Interest Expense account. 31 1 Reversed adjusting entry for accrued interest payable. 9 June 1 1 Bought various securities with sinking fund cash; cost, $229,600. Paid semiannual interest on bonds. July Recorded receipt of $8,114 of income derived from sinking fund investments, depositing the cash in the sinking fund. 8 Dec. 1 31 Bought various securities with sinking fund cash, $9,464. Paid semiannual interest on bonds. Recorded receipt of $15,992 of income derived from sinking fund investments, depositing the cash in the sinking fund.