Pedigo Company issued $450,000, 7%, 10-year bonds on January 1, 2010, for $483,120. This price resulted in

Question:

Pedigo Company issued $450,000, 7%, 10-year bonds on January 1, 2010, for $483,120. This price resulted in an effective-interest rate of 6% on the bonds. Interest is payable annually on January 1. Pedigo uses the effective-interest method to amortize bond premium or discount.
Instructions
Prepare the journal entries (rounded to the nearest dollar) to record:
(a) The issuance of the bonds.
(b) The accrual of interest and the premium amortization on December 31, 2010.
(c) The payment of interest on January 1, 2011.