The Bradford Company issued 10% bonds, dated January 1, with a face amount of $50 million on January 1, 2013 to Saxton-Bose Corporation. The bonds mature on December 31, 2022 (10 years). For bonds of similar risk and maturity, the market yield is 12%. Interest is paid semiannually on June 30 and December 31.
1. Prepare the journal entry to record the purchase of the bonds by Saxton-Bose on January 1, 2013.
2. Prepare the journal entry to record interest revenue on June 30, 2013 (at the effective rate).
3. Prepare the journal entry to record interest revenue on December 31, 2013 (at the effective rate).