Horngren financial and managerial accounting 6th edition

Chapter 12, question 37

P12AB-37A

Brad Nelson Inc. issued $600,000 of 7% six year bonds payable on January 1, 2018. The market interest rate at date of issuance was 6% and the bonds pay interest semiannually.

a. How much cash did the company receive upon issuance of bonds payable.

b. Prepare amortization table for the bond using the effective interest method, through the first two interest payments.

c. journalize the issuance of the bonds on January 1, 2018 and the first and second payments of the semiannual interest amount and amortization of the bonds on June 30, 2018 and December 20, 2018. No explanations required.