Zorin Corporation sold $3,500,000, 7%, 20-year bonds on December 31, 2006.

The bonds were dated December 31, 2006, and pay interest on December 31. The company uses straight-line amortization for premiums and discounts. Financial statements are prepared annually.

Instructions

(a) Prepare the journal entry to record the issuance of the bonds assuming they sold at:

(1) 97%.

(2) 104.

(b) Prepare amortization tables for both of the assumed sales for the first three interest payments.

(c) Prepare the journal entries to record interest expense for the first two interest payments under both assumed sales.

(d) Show the balance sheet presentation for both assumed sales at December 31, 2007.