Kelly Furniture Company issued \(\$ 400,000\) face value of \(18 \%, 20\)-year junk bonds on October 1, 1998. The bonds are dated October 1, 1998, call for semiannual interest payments on April 1 and October 1, and are issued to yield \(16 \%\) ( \(8 \%\) per period).

\section*{Required}

a. Compute the amount received for the bonds.

b. Prepare an amortization schedule similar to that in Illustration 15.5. Enter data in the schedule for only the first two interest periods. Use the interest method and make all calculations to the nearest dollar.

c. Prepare entries to record the issuance of the bonds, the first six months' interest on the bonds, and the adjustment needed on June 30, 1999, assuming the company's fiscal year ends on that date.