On July 1, 2011, Atwater Corporation issued $2,000,000 face value, 10%, 10-year bonds at $2,271,813. This price resulted in an effective-interest rate of 8% on the bonds. Atwater uses the effective-interest method to amortize bond premium or discount. The bonds pay semiannual interest July 1 and January 1.
- Prepare the journal entry to record the issuance of the bonds on July 1, 2011
- Prepare an amortization table through December 31, 2012 (3 interest periods) for this bond issue.
- Prepare the journal entry to record the accrual of interest and the amortization of the premium
- Prepare the journal entry to record the payment of interest and the amortization of the premium on July 1, 2012, assuming no accrual of interest on June 30.
- Prepare the journal entry to record the accrual of interest and the amortization of the premium on December 31, 2012.