=+PR 14-3A Bond premium, entries for bonds payable transactions obj. 3

✔ 3. $164,627 The following transactions were completed by Hobson Inc., whose fiscal year is the calendar year:

2010 July 1. Issued $18,000,000 of five-year, 10% callable bonds dated July 1, 2010, at an effective rate of 12%, receiving cash of $16,675,184. Interest is payable semiannually on December 31 and June 30.

Oct. 1. Borrowed $400,000 as a 10-year, 7% installment note from Marble Bank.

The note requires annual payments of $56,951, with the first payment occurring on September 30, 2011.

Dec. 31. Accrued $7,000 of interest on the installment note. The interest is payable on the date of the next installment note payment.

31. Paid the semiannual interest on the bonds.