Henderson Armour Inc. issued a $652,000, 14%, 10-year bond on October 1, 2023, for cash of $697,701. Interest is to be paid quarterly. The annual market rate of interest is 12.75%. Assume a year-end of February 28. A partial amortization schedule, using the effective interest method, is shown below.

a. Record the issuance of the bond on October 1, 2023.

b. Record the accrual of bond interest and premium amortization on February 28, 2024, the year-end, and the subsequent payment of interest on April 1, 2024.

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Period Ending Oct. 1/23 Jan. 1/24 Apr. 1/24 July 1/24 Oct. 1/33 Totals (A) Cash Interest Paid $652,000 x 14% x 3/12 $ 22,820 22,820 22,820 22,820 $912,800 (B) Period Interest Expense (E) * 12.75% x 3/12 $22,239 22,221 22,202 20,845 $867,099 (C) Premium Amort. (A) - (B) $ 581 599 618 1,975 $45,701 (D) Unamortized Premium $45,701 45,120 44,521 43,903 -0- (E) Carrying Value $652,000 + (D) $697,701 697,120 696,521 695,903 652,000