ON Jan. , 2016 Lynch Company acquired 13% bonds with a face value of $50,000. The bonds pay interest on June 30 and December 31 and mature on Dec. 31, 2018. Lynch paid $51,229.35, a price that yields a 12% effective annual interest rate.

1. Record the purchase of the bonds

2. Prepare an investments interest income and premium amortization scheduel using the effective interest method

3. Record the receipts of interest on June 30, 2016, and Dec. 31, 2018.