On June 30,2009 County Company issued 12% bonds with a par value of $800,000 due in 20 years. They were issued at 98 and were callable at 104 at any due date after June 30th 2017. Because of lower interest rate and a significant change in the company's credit rating, it was decided to call the entire issue on June 30, 2018 and to issue new bonds. new 10% bonds were sold in the amount of $1,000,000 at 102; they mature in 20 years. County Company uses straight-line amortization. Interest payment dates are December 31 and June 30.
Instructions;
a) Prepare journal entries to record the redemption of the old issue and the sale of the new issue on June 30,2018
b) Prepare the entry required on December 31,2018 to record the payment of the first 6 month's interest and the amortization of the premium on the bonds.