Starlight Drive-Ins Ltd. borrowed money by issuing $5,000,000 of 7% bonds payable at 95.5 on July 1, 2021. The bonds are 10-year bonds and pay interest each January 1 and July 1.

1. How much cash did Starlight receive when it issued the bonds payable? Journalize this transaction.

2. How much must Starlight pay back at maturity? When is the maturity date?

3. How much cash interest will Starlight pay each six months?

4. How much interest expense will Starlight report each six months? Use the straight-line amortization method. Journalize the entries for the accrual of interest and amortization of discount on December 31, 2021, and the payment of interest on January 1, 2022.