The following is taken from the Pinkston Company balance sheet.
PINKSTON COMPANY
Balance Sheet (partial)
December 31, 2011
Current liabilities
Bond interest payable (for 6 months from July 1 to December 31) $ 80,080
Long-term liabilities
Bonds payable, 8% due January 1, 2022 $2,002,000
Add: Premium on bonds payable 227,800
$2,229,800
Interest is payable semiannually on January 1 and July 1. The bonds are callable on any semiannual interest date. Pinkston uses straight-line amortization for any bond premium or discount. From December 31, 2011, the bonds will be outstanding for an additional 10 years (120 months).
(a)Journalize the payment of bond interest on January 1, 2012.
Jan. 1
DB: Bond interest payable 80,080
CD: Cash 80,080
NOT SURE IF THIS IS CORRECT
(b)Prepare the entry to amortize bond premium and to pay the interest due on July 1, 2012, assuming no accrual of interest on June 30.
July 1
DB:
DB:
CR:
(c)Assume that on July 1, 2012, after paying interest, Pinkston Company calls bonds having a face value of $800,800. The call price is 101. Record the redemption of the bonds.
July 1
DB:
DB:
CR:
CR:
(d)Prepare the adjusting entry at December 31, 2012, to amortize bond premium and to accrue interest on the remaining bonds.
Dec 31
DB:
DB:
CD:
.. i have no idea how to do this.. if you answer, can you please involve the step you did for the calculations..
PINKSTON COMPANY
Balance Sheet (partial)
December 31, 2011
Current liabilities
Bond interest payable (for 6 months from July 1 to December 31) $ 80,080
Long-term liabilities
Bonds payable, 8% due January 1, 2022 $2,002,000
Add: Premium on bonds payable 227,800
$2,229,800
Interest is payable semiannually on January 1 and July 1. The bonds are callable on any semiannual interest date. Pinkston uses straight-line amortization for any bond premium or discount. From December 31, 2011, the bonds will be outstanding for an additional 10 years (120 months).
(a)Journalize the payment of bond interest on January 1, 2012.
Jan. 1
DB: Bond interest payable 80,080
CD: Cash 80,080
NOT SURE IF THIS IS CORRECT
(b)Prepare the entry to amortize bond premium and to pay the interest due on July 1, 2012, assuming no accrual of interest on June 30.
July 1
DB:
DB:
CR:
(c)Assume that on July 1, 2012, after paying interest, Pinkston Company calls bonds having a face value of $800,800. The call price is 101. Record the redemption of the bonds.
July 1
DB:
DB:
CR:
CR:
(d)Prepare the adjusting entry at December 31, 2012, to amortize bond premium and to accrue interest on the remaining bonds.
Dec 31
DB:
DB:
CD:
.. i have no idea how to do this.. if you answer, can you please involve the step you did for the calculations..