On January 1, 2015, White Water issues $200,000 of 7% bonds, due in 10 years, with interest payable annually on December 31 each year.

Required:
Assuming the market interest rate on the issue date is 8%, the bonds will issue at $186,580.
1. Complete the first three rows of an amortization table. Use Illustration 9-10, except the dates for the first three rows will be 1/1/12, 12/31/12, and 12/31/13 since interest is payable annually rather than semi-annually. Interest expense for period ended December 31, 2015, is calculated as the carrying value of $186,580 times the market rate of 8%.
2. Record the bond issue on January 1, 2015, and the first two interest payments on December 31, 2015, and December 31, 2013.