On January 1, 2011, a company issued 1,000,000, of 5 year, 12% bonds at an effective interest rate of 13% , receiving cash of 964,060. Intrest on the bonds is payable semiannually on June 30 and December 31.
1. Journalize the entry to record the issuance of the bonds on January 1.
2. Journalize the entry to record the first semi- annual intrest payment on June 30 and the amortization of the bond discount using the straight line method.