2. Titania Co. sells $400,000 of 12% bonds on June 1, 2012. The bonds pay interest on December 1 and June 1. The due date of the bonds is June 1, 2016. The bonds yield 10%. On October 1, 2013, Titania buys back $120,000 worth of bonds for $126,000 (includes accrued interest). Give entries through December 1, 2014.

Instructions

(Round to the nearest dollar.)

For the case prepare all of the relevant journal entries from the time of sale until the date indicated.

Use the effective-interest method for discount and premium amortization (construct amortization tables

where applicable). Amortize premium or discount on interest dates and at year-end. (Assume that no reversing

entries were made.)

I understand the amortization schedule on the original sale of bonds. When the $120,000 worth of bonds are bought back that is where I don't know if I should make a new amortization schedule for the new amount of bonds outstanding or calculate a new effective interest rate or how to continue my journal entries. Thank you!