Presented below are selected transactions on the books of Simonson Corporation.

• May 1, 20x0: Bonds payable with a par value of $900,000, which are dated January 1, 20x0, are sold at 106 plus accrued interest. They are coupon bonds, bear interest at 12% (payable annually at January 1), and mature January 1, ten years later.
• Dec. 31: 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.)
• Jan. 1, 20x1: Interest on the bonds is paid.
• Apr. 1: Bonds of par value of $360,000 are called at 102 plus accrued interest, and retired.
• Dec. 31: Adjusting entries are made to record the accrued interest on the bonds, and the proper amount of premium amortized.

Instructions Prepare journal entries for the transactions above. Repeat the problem under the effective interest method using the Goal Seek function in Excel to find the interest rate.