Blue Ivy Corporation issued $900,000 bonds on June 30, 2016 for $967,708. The bonds mature on June 30, 2036 (20 years). The market rate is 12%, while the stated rate is 13%. Interest is paid semi-annually on December 31, and June 30. First payment is due December 31, 2016.

1. Prepare an amortization schedule that determines interest at the effective interest rate.

2. Prepare an amortization schedule by the straight-line method.

3. Prepare the journal entries to record interest expense on June 30, 2018, by each of the two approaches.