On Jan 1 of the current fiscal year, Block Co, issued $1,000,000 of 10-year. 10% bonds. The Bonds were dated Jan 1 of the same year. Interest on the bonds is payable on Jan 30 and Dec 31 of each year.
Record the following transactions.
1. The bonds were sold for $885,295 on Jan 1 of the current year. the market rate of interest on that date was 12%.
2. Interest was paid on June 30, and the related amount of bond discount was amortized, based on the straight-line method.
3. Interest was paid on Dec 31, and the related amount of bond discount was amortized, based on the straight-line method.
4. On dec 31 (bonds are 1 year old), one-half of the bonds were redeemed at 98.