ABC Corporation issues $100,000 of 12%, five years bonds on January 1, 2019 with interest payable each July 1 and January 1. The bonds sell for $96,406 (96,406) of face value). The sales prices result in bond discount of $3,594, and effective interest rate of 13%.

Instructions

1. Prepare the journal entry to record the issuance of bonds on January 1, 2019.
2. Prepare the bond discount amortization schedule using effective interest method.
3. Prepare the journal entry to accrue the interest expense on December 31, 2019.
4. Prepare the bond discount amortization schedule using straight-line method.