Legacy issues $325,000 of 5%, four-year bonds dated January 1, 2013, that pay interest semiannually on June 30 and Dec 31. They are issued at $292181 and their market rate is 8% at the issue date.
1. Prepare the January 1, 2013 journal entry to record the bonds issuance
2. Determine the total bond interest expense to be recognized over the bonds life
3. Prepare a straight line amortization table for the bonds first two years
4. Prepare the journal entries to record the first two interest payments
5. Assume the market rate on January 1, 2013 is 4% instead of 8%. Without providing numbers, describe how this change affects the amounts reported on legacy financial statements.