On January 1, 2011, Park Corporation sold a $600,000, 7.5 percent bond issue (8.5 percent market rate). The bonds were dated January 1, 2011, pay interest each June 30 and December 31, and mature in four years.
Required:
1. Give the journal entry to record the issuance of the bonds.
2. Give the journal entry to record the interest payment on June 30, 2011. Use effective-interest amortization.
3. Show how the bond interest expense and the bonds payable should be reported on the June 30, 2011, income statement and balance sheet.