Durango Corporation sold $1,500,000, 8%, 10-year bonds on January 1, 2001. The bonds were dated January 1, 2001, and pay interest on July 1 and January 1. Du- rango Corporation uses the straight-line method to amortize bond premium or discount.

Assume no interest is accrued on June 30.

Instructions

(a) Prepare all the necessary journal entries to record the issuance of the bonds and bond interest expense for 2001, assuming that the bonds sold at 104.

(b) Prepare journal entries as in part

(a) assuming that the bonds sold at 98.

(c) Show the balance sheet presentation for the bond issue at December 31, 2001 using (1) the 104 selling price, and then (2) the 98 selling price.