2. Danish Bakery issued $1,000,000, face amount, of 6% bonds on January 1, 2020. The bonds are 10-years bonds, and interest is payable every 6 months. At the time of issue, the market rate of interest was only 8%, so the bonds were issued at a discount.

a) Prepare calculations showing that issue price was approximately $902,714.

b) Use the effective interest method of amortization, and prepare the journal entries, that Danish Bakery would record on January 1, 2020, June 30, 2020 and December, 31, 2020.

c) Show how the bonds would appear on Danish Bakery`s December 31, 2020, Statement of Financial Position.