Zero Coupon Bond (Straight Line)}

Johnson Company sold for \(\$ 90,000\) a \(\$ 102,400\), two-year zero coupon bond on December 31, 2018. The bond matures on December 31, 2020.

\section*{Required:}

1. Prepare the entry to record the issuance of the bond.

2. Prepare the adjustment to recognize 2019 interest expense.

3. Prepare the entry to recognize the 2020 interest expense and the repayment of the bond on December 31, 2020 .

\section*{OBJECTIVE 4 Exercise