Legacy issues $680,000 of 6.5%, four-year bonds dated January 1, 2015, that pay interest semiannually on June 30 and December 31. They are issued at $603,061 and their market rate is 10% at the issue date.

1.

Prepare the January 1, 2015, journal entry to record the bonds' issuance.

Journal Entry Worksheet

Record the issue of bonds with a par value of $680,000 cash on January 1, 2015 at an issue price of $603,061

2.

Complete the below table to calculate the total bond interest expense to be recognized over the bonds' life. (Do not round intermediate calculations.)

Total bond interest expense over life of bonds:
Amount repaid:
	payments of
Par value at maturity
Total repaid			0
Less amount borrowed
Total bond interest expense			$0

3.

Prepare an effective interest amortization table for the bonds' first two years.

Semiannual Interest Period-End	Cash Interest Paid	Bond Interest Expense	Discount Amortization	Unamortized Discount	Carrying Value
01/01/2015
06/30/2015
12/31/2015
06/30/2016
12/31/2016

4.	Prepare the journal entries to record the first two interest payments. Journal Entry Worksheet 1. Record the first interest payment on June 30, 2015. 2. Record the second interest payment on December 31, 2015.