Legacy issues $700,000 of 7.5%, four-year bonds dated January 1, 2016, that pay interest semiannually on June 30 and December 31. They are issued at $643,419 and their market rate is 10% at the issue date.

Prepare the January 1, 2016, journal entry to record the bonds' issuance.

Record the issue of bonds with a par value of $700,000 cash on January 1, 2016 at an issue price of $643,419.

Date	General Journal	Debit	Credit
Jan 1

2. Determine the total bond interest expense to be recognized over the bonds' life.

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

3. Prepare a straight-line amortization table for the bonds' first two years.

Semiannual Period-End	Unamortized Discount	Carrying Value
01/01/2013
06/30/2013
12/31/2013
06/30/2014
12/31/2014

Prepare the journal entries to record the first two interest payments.

Record the first interest payment on June 30, 2016.

Record the second interest payment on December 31, 2016.

Date	General Journal	Debit	Credit
June 30

Date	General Journal	Debit	Credit
Dec 31