HealthFirst Corp. is evaluating its financial performance for the year ending December 31, 20X1. The company issued a 10-year, 6% bond with a face value of $1,200,000 at a discount of $60,000 on January 1. Interest is payable semi-annually on June 30 and December 31. The company paid semi-annual interest on the bonds on June 30 and recorded accrued interest on December 31.

Required:

1. Prepare the journal entries for the bond issuance, interest payments, and accrued interest.
2. Calculate the total interest expense for the year ending December 31, 20X1.
3. Prepare the balance sheet extract showing the bonds payable and accrued interest as of December 31, 20X1.
4. Discuss the impact of the bond issuance on the company’s leverage and interest coverage ratios.