On January 1, 2014, Park Corporation sold a $600,000, 7.5 percent bond issue (8.5 percent market rate). The company does not use a discount account. The bonds were dated January 1, 2014, pay interest each June 30 and December 31, and mature in four years. (FV of $1, PV of $1, FVA of $1, and PVA of $1) (Use the appropriate factor(s) from the tables provided.)

1. Prepare the journal entry to record the issuance of the bonds.

2. Prepare the journal entry to record the interest payment on June 30, 2014. Use effective-interest amortization.

3. Show how the bond interest expense and the bonds payable should be reported on the June 30, 2014, income statement and balance sheet.