On January 1, 2014, Microsoft Corporation issued $400,000 of 3% bonds due in 7 years with interest payable annually at year-end. The current market rate of interest for bonds of similar risk is 3.49%. The bond sold at 97.

-What is the issue price?

-What does the issue price mean?

-Was the bond sold at a premium or at a discount? How much was the bond sold for?

-Prepare an amortization schedule using the effective interest method.

-How would the balance sheet look on 1/1/2014, 12/31/2014, 12/31/2015, and 12/31/2020?