Q1) Suppose Dollar General Stores, Inc., is authorized to issue $500,000 of 7%, 10-year bonds payable. On December 31, 20X6, when market interest rate is 8%, company issues $400,000 of bonds and receives cash of $372,660. Dollar General amortizes bonds by effective-interest method. Semiannual interest dates are June 30 and December 31.
Questions:
1. Make a bond amortaization table for first four semiannual interest periods.
2. Record issuance of bonds payable on December 31, 20X6, semiannual interest payment on June 30, 20X7, and payment on December 31, 20X7.