On the first day of its fiscal year Woodard company issued $12,000,000 of 10 year, 8% bonds to finance its operations of producing and selling products. Interest is payable semi annually. Bonds were issued at a market interest rate of 10%, resulting in the Woodard company receiving cash of $10,504,541.
A) Journalize the entries to record the following:
1. Issuance of the bonds
2. First semi annual interest payment (amortization of discount is to be recorded annually)
3. Second semiannual interest payment
4. Amortization of discount at the end of the first year, using the straight line method (round to nearest dollar)
B) Determined the amount of the bond interest expense for the first year