A company issues bonds with a par value of $800,000 on January 1, 2014. The bonds mature in five years and pay 6% annual interest in two semiannual payments. On the issue date, the market rate of interest is 8%.

Present value of an annuity for 10 periods at 3%	8.5302
Present value of an annuity for 10 periods at 4%	8.1109
Present value of 1 due in 10 periods at 3%	0.7441
Present value of 1 due in 10 periods at 4%	0.6756

1. Using the information above compute the amount of cash received by company on the date of issuance.
2. Are the bonds issued at a premium or a discount? How does one determine whether a bond is issued at a premium or a discount?
3. Record the journal entry on the date of issuance for the bonds.
4. Calculate the total amount of interest expense recorded on the bonds.
5. Prepare the journal entry for the first interest payment on June 30, 2014.
6. Show how the bond and related accounts would be disclosed on the December 31, 2014 financial statements.