Issue bonds payable (premium); record interest payment and the related bond amortization using the effective-interest method
Response to the following problem:
On June 30, 2014, the market interest rate is 3%. Garden Groceries Ltd. issues $1,600,000 of 4%, 15-year bonds. The bonds pay interest on June 30 and December 31. Garden Groceries Ltd. amortizes bond premium by the effective-interest method.