On January 1,2014 Oaken Furniture Co. issued $700,000 of 10% bonds and received cash totaling $795,141. Interest is payable semiannually on January 1 and July 1. The maturity date on these bonds is January 1, 2024. The firm uses the effective-interest method of amortizing discounts and premiums. The bonds were sold to yield an effective rate of 8%. Oaken Furniture Co. is a calendar-year corporation.
a) Prepare an amortization table through the first two interest periods (July 1 2014 & January 1, 2015) using the effective-interest method.
b) Prepare journal entries to record bond-related transactions as of the folowing dates January 1,2014, July 1 2014, Dec 31,2014