On December 31, 2020, Whitfield Corp. issued $ 400,000 10% bonds, due on December 31, 2025. Interest is to be paid semi-annually on June 30 and December 31. The bonds were sold at a market value of $432,444 to yield 8% effective annual interest. Whitfield has a calendar year end.

Required:

2.

Prepare the journal entry for Whitfield at December 31, 2021, to record the payment of 6 months interest (from June 30 to December 31) and related expense. (3 marks)

3.

Assume instead that Whitfield is using the straight-line method to amortize the bond premium. What would be the carrying amount of the bonds at December 31, 2021? (3 marks)