Patton issues $560,000 of 9.0%, four-year bonds dated January 1, 2011, that pay interest semiannually on June 30 and December 31. They are issued at $507,831 and their market rate is 12% at the issue date.
1.Prepare the January 1, 2011, journal entry to record the bonds' issuance.
2.Determine the total bond interest expense to be recognized over the bonds' life.
3.Prepare a straight-line amortization table for the bonds' first two years.
4.Prepare the journal entries to record the first two interest payments.