On January 1, 2014, Oaken Furniture Co. issued $700,000 of 10% bonds and received cash totaling $795,141. Interest is payable semiannually on January 1 and July 1. The maturity date on these bonds is January 1, 2024. The firm uses the effective -interest method of amortizing discounts and premiums. The bonds were sold to yield an effective interest rate of 8%. Oaken Furniture Co. is a calendar-year corporation.
1) Prepare an amortization table through the first two periods (7/1/14 & 1/1/15) using the effective interest method.
2) Prepare the journal entries to record bond related transactions as of the following dates:
a) January 1, 2014
b) July 1, 2014
c) December 31,2014