Presented below are selected transactions on the books of Marigold Foundry.

July $1,2022$ Bonds payable with a par value of $986,400,$ which are dated January $1,2022,$ are sold at $112\mathrm{.}290$ plus accrued interest to yield $10\%.$ They are coupon bonds, bear interest at $12\%($payable annually at January $1),$ and mature January $1,2032.($Use interest expense account for accrued interest.$)$

Dec. $31$ Adjusting entries are made to record the accrued interest on the bonds, and the amortization of the proper amount of premium.

Jan. $1,2023$ Interest on the bonds is paid.

Jan. $2$ Bonds of par value of $394,560$ are called at $101$ and extinguished.

Dec. $31$ Adjusting entries are made to record the accrued interest on the bonds, and the proper amount of premium amortized.

Date

Account Titles and Explanation

Debit

Credit

Bonds Payable

$1107628\mathrm{.}56$

Interest Expense

$($To record the interest$)$

$($To amortize the premium$)$

Cash

$118368$

Jan. $2,2023$

Gain on Extinguishment of Debt

Interest Expense

Interest Payable

$($To record the interest$)$

$($To amortize the premium$)$