On May 1 2012, Jaguchi issued $300,000 of 12%, 5-year bonds for $294,200 plus accrued interest. The bonds are dated March 1, 2012, and pay semiannual interest on March 1 and September 1. Jaguchi uses the straight line method of amortization and will amortize the discount over the 58 months that the bonds are expected to be outstanding.

Instructions

a. Prepare journal entries to record 1) the bond issuance on May 1, 2012; 2) the semiannual interest payment and discount amortization on September 1, 2012 and 3) accrued interest and discount amortization on December 31, 2012.

b. Compute total bond interest expense for 2012.

c. Present the proper amortization table throughout the life of bond.