On 1st Jan., 2016, Camco Company sold 12% bonds having a maturity value of $800,000 for $ 860,653, which provides the bondholders with a 10% yield. The bonds are dated January 1st 2016, and mature January 1st 2021, with interest payable December 31 of each year.

Instructions

1. a) Prepare the journal entry at the date of the bond issuance. (10marks)

2. b) Prepare a schedule of interest expense and bond amortization for 2016 2018. (15marks)

c) Prepare the journal entry to record the interest payment and the amortization for 2017.

(10marks)