P 14-6 (Issuance of Bonds between Interest Dates, Straight-Line, Redemption) Presented below are selected transactions on the books of Simonson Corp. May 1, 2014 Dec. 31 Jan. 1, 2015 April 1 Dec. 31 Bonds payabable with a par value of $900,000, which are dated Jan 1, 2014, are sold at 106 plus accrued interest. They are coupon bonds, bear interest at 12% (payable annually at Jan 1), and mature Jan 1, 2024. Adjusting entries are made to record the accrued interest on the bonds, and the amortization of the proper amount of premium. (Use straight-line amortization) Interest on the bonds is paid. Bonds with par value of $360,000 are called at 102 plus accrued interest, and redeemed. (Bonds premium is to be amortized only at the end of each year) Adjusting entries are made to record the accrued interest on the bonds, and the proper amount of premium amortized. Prepare journal entries for the transaction above. 5/112014 12/31/2014 Cash ...... .......990,ooo Bonds Payable............................................. .goo,ooo Premium on Bonds Payable......................... ..54,ooo Interest Expense........................................... ..36,ooo (cash [900,000 x 106%] + [900,000 x x 4/12] = 5,000) Interest Expense....................... ..108,ooo Interest Payable........................................... .108,ooo (900,000 x = 108,000) Premium on Bonds Payable.... ..3,724.14 Interest ..3,724.14 (54,000 x 8/116 = 3,724.14)