CP$10-6($Algo$)($Supplement $10$A$)$ Recording Bond Issuance and Interest Payments $($Straight$-$Line Amortization$)[$LO $10-$S$1]$

Southwest Corporation issued bonds with the following details:

Face value: $$700,000$

Interest: $9$ percent per year payable each December $31$

Terms: Bonds dated January $1,2021,$ due five years from that date

The annual accounting period ends December $31.$ The bonds were issued at $104$ on January $1,2021,$ when the market interest rate was $8$ percent. Assume the company uses straight$-$line amortization and adjusts for any rounding errors when recording interest expense in the final year.

Required:

$1.$ Compute the cash received from the bond issuance in dollars. TIP: The issue price typically is quoted at a percentage of face value.

$2.$ & $3.$ Prepare the journal entry to record the issuance of the bonds and the payment of interest on December $31,2021$ and $2022.$

$4-$a$.$ How much interest expense would be reported on the income statements for $2021$ and $2022?$

$4-$b$.$ Compute the bond value which should be reported on the balance sheets at December $31,2021$ and $2022.$