On January 1, 2009 Mykoo Corporation issued $1 million in five year, 10% serial bonds to be repaid in the amount of $200,000 on January 1, 2010, 2011, 2012, 2013, and 2014. Interest is payable at the end of each year. The bonds were sold to yield a rate of 12%. Information on present value and future amount factors is as follows:
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Required:
1. Prepare a schedule showing the computation of the total amount received from the issuance of the serial bonds. Show supporting computations in good form.
2. Assume the company originally sold the bonds at a discount of $46,498. Prepare a schedule of amortization of the bond discount for the first two years after issuance, using the interest (effective rate) method. Show supporting computations in goodform.