HealthFirst Solutions is preparing its financial statements for the year ending December 31, 20X1. The company issued a 5-year, 6% bond with a face value of $1,000,000 at a discount of $50,000 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:

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