Ben Nowak issued $500,000 of 11%, 9-year bonds payable on January 1, 2016. The market interest rate at the date of issuance was 8%, and the bonds pay interest semiannually.
Requirements
1. How much cash did the company receive upon issuance of the bonds payable?
2. Prepare an amortization table for the bond using the effective-interest method, through the first two interest payments.
3. Journalize the issuance of the bonds on January 1, 2016, and payment of the first semiannual interest amount and amortization of the bond on June 30, 2016. Explanations are not required.