Simon issues four-year bonds with a $50,000 par value on June 1, 2004, at a price of $47,974. The annual contract rate is 7%, and interest is paid semiannually on November 30 and May 31.

1. Prepare an amortization table like the one in Exhibit 10.7 for these bonds. Use the straight-line method of interest amortization.

2. Prepare journal entries to record the first two interest payments and to accrue interest as of December 31, 2004.

Exercise IO-IO Straight-line amortization and accrued bond interest expense PI P2