Presented below are selected transactions on the books of Simonson Foundry. July 1, 2019 Bonds payable with

Question:

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

July 1, 2019 Bonds payable with a par value of €900,000, which are dated January 1, 2019, are sold at 112.290 plus accrued interest to yield 10%. They are coupon bonds, bear interest at 12% (payable annually at January 1), and mature January 1, 2029. (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, 2020 Interest on the bonds is paid.

Jan. 2 Bonds of par value of €360,000 are called at 102 and extinguished.

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.

Coupon
A coupon or coupon payment is the annual interest rate paid on a bond, expressed as a percentage of the face value and paid from issue date until maturity. Coupons are usually referred to in terms of the coupon rate (the sum of coupons paid in a... Par Value
Par value is the face value of a bond. Par value is important for a bond or fixed-income instrument because it determines its maturity value as well as the dollar value of coupon payments. The market price of a bond may be above or below par,...