Debit Credit
Interest Expense 125842
Premium on Bond payable 130658
Cash 256500
Bond issued $ 57,00,000 against which $68,75,926 cash received, so premium amount is difference of Bond issued and cash received which is comes to $11,75,926.
Premium on Bond issued to be amortized over the period of 9 years which is comes to
(11,75,926 / 9) i.e 130658.44.
And balance amount charged to interest expense.
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