Titania Co. sells $406,800 of 12% bonds on June 1, 2014. The bonds pay interest on December 1 and June 1. The due date of the bonds is June 1, 2018. The bonds yield 8%. On October 1, 2015, Titania buys back $124,900 worth of bonds for $131,340 (includes accrued interest). Prepare all relevant journal entries from the time of sale until December 1, 2016.(assume that no reverse entries were made.
have provided with the following information
Titania Co. sells $406,800 of 12% bonds on June 1, 2014.
interest is payable on December 1 and June 1
The bonds yield 8%.
Titania buys back $124,900 worth of bonds for $131,340
So the entry for the buy back of the share is be as follow
| Desccription | Debit | Credit | |
| 1/Octomber /2015 | Bonds payable | 124,900 | |
| Interest on bonds payable | 6,245 | ||
| Premium on banods payable | 195 | ||
| To cash | 131,340 |
Interest calculation on the bond
=124900*12/12*5/100
=124900*5/100
=6245
