Mitchell Inc., issued \(70,6 \%, \$ 1,000\) bonds on January 1,2020 . The bonds pay cash interest annually each January 1 (beginning January 1, 2021), and were issued to yield 4\%. The bonds mature January 1, 2030, and the company will use the straight-line interest method to amortize the bond discount or premium. Assume that the difference between the effective interest method and the straight-line interest method is not material.

Required

a. Determine the selling price of the bonds.

b. Prepare an amortization schedule for the full bond term.

c. Prepare journal entries on the following dates.

1. January 1,2020 , bond issuance.

2. December 31,2020 , interest accrual.

3. January 1,2021 , interest payment.