On December 31, 2007, Ace issued $8,000,000, 7% bonds to yield 8% Ace incurred 120,000 of bond issue costs interest is payable semi-annually on December 31 and June 30. the bonds mature on December 31, 2012.
On December 31, 2010 Ace retired $2,000,000 of the bonds at 104 plus accrued interest. Ace uses straight line amortization on the bond issue costs.
1) Calculate the proceeds of the bond issue.
2) Prepare a Bond Amortization Table (Use the effective interest method)
3) Prepare all journal entries for the issuance of the bonds, the interest payments, the early retirement and the payoff of the bonds of maturity.