Henderson Inc. issued a $652,000, 14% 10-year bond on October 1, 2014, for cash of $697,701. Interest is to be paid quarterly. The annual market rate of interest is 12.75%. Assume a year-end of February 28. A partial amortization schedule, using the effective interest method, is shown below.

a. Record the issuance of the bond on October 1, 2014.
b. Record the accrual of bond interest and premium amortization on February 28, 2015, the year-end, and the subsequent payment of interest on April 1,2015.

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Cash Perlod Interest Expense (E) x 12.75% x 3/12 Carrying Value Interest Pald 14% x 3/12 S22,820 Premlum Amort. $652,000 Unamortized Period Ending Premium $652,000+ (D) an 1/5. Apr. 1/15.. S 22,239 22,221 22,202 S 581 599 618 $45,701 45,120 44,521 43,903 697,701 697,120 696,521 695,903 22,820 22,820 Oct. 1/24... 22,820 $912,800 20,845 $867,099 1,975 $45,701 -0 652,000