I. Andrew Company purchased $100,000, 10%, 5-year bonds on January 1, 20x1, with interest payable on July 1 and January 1. The effective interest rate for these bonds was 8.5%. The market value on December 31, 20x1 was $104,400 and all bonds were sold for 103 on January 2, 20x2. Andrew is a calendar-year corporation and use the effective interest method for amortization of premium or discount. Assuming the bond investment is classified as available for sale security, answer the following questions (round all amounts to the nearest dollar):

1) Determine the cost of investment.

2) Prepare the schedule for the first 2 payments and amortizations.

3) Prepare journal entries on

1/1/x1

7/1/x1

12/31/x1 (adjusting entry)

1/1/x2

1/2/x2 (sale)