Cuffe Inc. issued $500,000, callable, 10%, 10-year bonds at 97 on January 2, 2012. The bonds are callable at 102 any time after January 2, 2012. On December 31, 2017, Cuffe Inc. calls the entire issuance.
a) Compute the balance in the premium or discount account on December 31, 2017.
Cuffe Inc. uses the straight-line method of amortization.
b) Prepare the entry to call the bonds on December 31, 2017