On June $30,2012,$ County Company issued $12\%$ bonds with a par value of $$800,000$

due in $20$ years. The bonds were issued at an effective yield of $14\%$ and were callable

at $102$ at any date after June $30,2020.$

Because of lower interest rates and a significant change in the company's credit rating,

it was decided to call the entire issue on June $30,2023,$ and to issue new bonds. New

$10\%$ bonds were sold in the amount of $$1,000,000$ at $102$ ; they mature in $20$ years.

County Company uses the effective interest method of amortization. Interest payment

dates are December $31$ and June $30.$

Quick note about solving this problem: What you need to do is calculate the CV of the

bonds at redemption $(CV=$ Value at issue $+/-$ unamortized D$/$P$),$ and calculate any

gain$/$loss on early redemption.

Instructions:

$($a$)$ Prepare journal entries to record the redemption of the old issue and the sale of

the new issue on June $30,2023.$

$($b$)$ Prepare the entry required on December $31,2023,$ to record the payment of the

first $6$ months' interest and the amortization of premium on the new bonds.