On Jan. 1, 2011, Whittington Stoves issued $800 million of its 8% bonds for $736 million. The bonds were priced to yield 10%. Interest is payable semi annually on june 30 and December 31. Whittington records interest at the effective rate.
1. Prepare a journal entry to record the bond issuance on Jan. 1, 2011.
2. Prepare an amortization schedule fo the first two years.
3. prepare a journal entry to record interest on december 31,2012, using the effective interest method.