Storall Company issued \(\$ 200,000\) face value of \(16 \%, 20\)-year junk bonds on July 1, 1999. The bonds are dated July 1, 1999, call for semiannual interest payments on July 1 and January 1, and were issued to yield \(12 \%\) ( \(6 \%\) per period).

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.

c. Prepare journal entries to record issuance of the bonds, the first six months' interest expense on the bonds, and the adjustment needed on May 31, 2000, assuming the company's fiscal year ends on that date.