Issue $400,000 of bonds. The bonds issue would be developed with a stated rate of 5% and would be a 10 years bong with interest paid semi-annually on June 30 and December 31.

The current market rate for a similar bond is 3%. John would like the journal entry for the bond issue and journal entry for first two interest payments. the company would use the effective interest rate to amortize any bond discount or premium.