Problem:
On June 30, 2006, County Company issued 12% bonds with a par value of $826,300 due in 20 years. They were issued at 98 and were callable at 105 at any date after June 30, 2014. Because of lower interest rates and a significant change in the company's credit rating, it was decided to call the entire issue on June 30, 2015, and to issue new bonds. New 10% bonds were sold in the amount of $1,027,000 at 102; they mature in 20 years. County Company uses straight-line amortization. Interest payment dates are December 31 and June 30.
Question 1: Prepare journal entries to record (1) the redemption of the old issue and (2) the sale of the new issue on June 30, 2015.
Question 2: Prepare the entry required on December 31, 2015, to record the payment of the first 6 month's interest and the amortization of premium on the bonds.
Note: Please show how to work it out.