Exercise #1:On January 1, 201X, Acorn Corporation issued $600,000 of 10%, 20-year bonds for $509,580, yielding a market rate of 12%. Interest is paid on July 1 and December 31. Acorn uses the interest method to amortize the discount.

Tasks:

a. Prepare an amortization schedule for the first three semiannual periods.

b. Prepare journal entries to record the following:

• Bond issue on January 1.
• Semiannual interest payments on July 1 and December 31 as well as amortization of discount.

c. If the bond were issued on March 1 and interest was paid on September 1 and March 1, what would be the year-end adjusting entry on December 31, 201X, to record accrued interest and amortization of discount?