Company sells 10% bonds having a maturity value of $2,000,000 for $1,855,816. The bonds are dated January 1, 2020, and mature in 5 years. Interest is payable annually on January 1.

Instructions:

1. Prepare the entry for the issuance of the bonds on 1/1/20.

2. Set up a schedule of interest expense and discount amortization under the straight-line method for all 5 years. (Round answers to the nearest dollar.)Use the following columns:

Year Cash Paid Interest Expense Discount Amortized Carrying Value

3. Prepare the journal entries needed for 12/31/20 (accrual of interest expense) and 1/1/21 (payment of interest)

4. Set up a schedule of interest expense and discount amortization under the effective-interest method for all 5 years. Use the same columns as above. (Round answers to the nearest dollar.)

5. Prepare the journal entries needed for 12/31/20 (accrual of interest expense) and 1/1/21 (payment of interest)