On January 1, 2016, Knorr Corporation issued $1,400,000 of 6%, 5-year bonds dated January 1, 2016. The bonds pay interest annually on December 31. The bonds were issued to yield 7%. Bond issue costs associated with the bonds totaled $27,560.53.

Required:

Prepare the journal entries to record the following:

January 1, 2016 Sold the bonds at an effective rate of 7%

December 31, 2016 First interest payment using the effective interest method

December 31, 2016 Amortization of bond issue costs using the straight-line method

December 31, 2017 Second interest payment using the effective interest method

December 31, 2017 Amortization of bond issue costs using the straight-line method

Additional Instructions:

- Refer to the PV tables.

- Round answers to 2 decimal places.

- Record your entries on the page that matches the year. For ex. Jan. 1 2016 should be recorded on page 2016.

\fTable 4 - Present Value of an Ordinary Annuity of 1: pD.n.i:1m.n..ipD,n,i:11(1 + ilni I1 1 .5096 4.00% 4.50% 5.00% 5.50% 6.00% 7.00% 9.00% 9.00% 10.00% 12.00% 14.00% 16.00% 19.00% 1 0.985222 0.961538 0.956938 0.952381 0.947867 0.943396 0.934579 0.925926 0.917431 0.909091 0.892857 0.877193 0.862069 0.847458 2 1.955883 1.886095 1.872668 1.85941 1.84632 1.833393 1.808018 1.783265 1.759111 1.735537 1.690051 1.646661 1.605232 1.565642 3 2.9122 2.775091 2.748964 2.723248 2.6979 33 2.673012 2.624316 2. 5770 97 2.531295 2.48 6852 2.401831 2.3216 32 2.24589 2.174273 4 3.854385 3.629895 3.587526 3.545951 3.50515 3.465106 3.387211 3.312127 3.23972 3.169865 3.037349 2.913712 2.798181 2.690062 5 4.782645 4.451822 4.389977 4.329477 4.270284 4.212364 4.100197 3.99271 3.889651 3.79 0787 3.604776 3.4330 81 3.274294 3.127171 5 5.697187 5.242137 5.157872 5.075692 4.9 9553 4.917324 4.766 54 4.62288 4.485919 4.355261 4.111407 3.8 886 68 3.684736 3.497603 7 6.598214 6.002055 5.892701 5.786373 5.682967 5.582381 5.389289 5.20637 5.032953 4.868419 4.563757 4.288305 4.038565 3.811528 I! 7.485925 6.732745 6.595886 6.463213 6.334566 6.209794 5.971299 5.746639 5.534819 5.334926 4.96764 4.638864 4.343591 4.077566 9 8.360517 7.435332 7.26 879 7.107822 6.952195 6.8 016 92 6.515232 6.246 888 5.995247 5.759024 5.32825 4.946 372 4.606544 4. 303022 10 9.222185 8.110896 7.912718 7.721735 7.537626 7.360087 7.023582 6.710081 6.417658 6.144567 5.650223 5.216116 4.833227 4.494086 11 10.07112 8.760477 8.528917 8.306414 8.092536 7.886875 7.498674 7.138964 6.805191 6.495061 5.937699 5.452733 5.028644 4.656005 12 10.90751 9.385074 9.118581 8.863252 8.618518 8.383844 7.942686 7.536078 7.160725 6.813692 6.194374 5.660292 5.197107 4.793225 13 11.73153 9. 985648 9 .6828 52 9.39 3573 9.117079 8.8 526 83 8.3576 51 7. 903776 7.486904 7.10 3356 6.423548 5.842362 5.342334 4. 909 513 14 12.54338 10.56312 10.22283 9.898641 9.589648 9.294984 8.745468 8.244237 7.78615 7.366687 6.628168 6.002072 5.467529 5.008062 15 13.34323 11.11839 10.73955 10.37966 10.03758 9.712249 9.107914 8.559479 8.060688 7.60608 6.810864 6.142168 5.575456 5.091578 15 14.13126 11.6523 11.23402 10.83777 10.46216 10.1059 9.446649 8.851369 8.312558 7.823709 6.973986 6.26506 5.668497 5.162354 17 14.90765 12.16 567 11.70719 11.27407 10.86461 10.47726 9.76 3223 9.121638 8 .5436 31 8.021553 7.1196 3 6.3728 59 5.748704 5.222334 19 15.67256 12.6593 12.15999 11.6 8959 11.246 07 10 .8276 10.05909 9.371887 8.755625 8.201712 7.249 67 6.46742 5.817848 5.273164 19 16.42617 13.13394 12.59329 12.08532 11.60765 11.15812 10.3356 9.603599 8.950115 8.36492 7.365777 6.550369 5.877455 5.316241 20 17.16864 13.59033 13.00794 12.46221 11.95038 11.46992 10.59401 9.818147 9.128546 8.513564 7.469444 6.623131 5.928841 5.352746 21 17.90014 14.02916 13.40472 12.82115 12.27524 11.76408 10.83553 10.0168 9.292244 8.648694 7.562006 6.686957 5.973139 5.383683 22 18 .620 82 14.45112 13.78443 13.163 12.58 317 12.04158 11.06124 10.20104 9.442425 8.77154 7.644646 6.742944 6.011326 5.409 901 23 19.33086 14.856 84 14.14778 13.48857 12.87504 12.30338 11.27219 10.37106 9 .58 0207 8.88 3218 7.718434 6.7920 56 6.044247 5.43212 24 20.03041 15.24696 14.49 548 13.79864 13.1517 12.550 36 11.46933 10.52876 9.706612 8.984744 7.784316 6.8 35137 6.072627 5.450 949 25 20.71961 15.62208 14.82821 14.0 939 5 13.41393 12.78 336 11.65358 10.67478 9.82258 9.07704 7.843139 6.872927 6.0970 92 5.466 906 26 21.39863 15.98277 15.14661 14.37519 13.6625 13.00317 11.82578 10.80998 9.928972 9.160945 7.89566 6.906077 6.118183 5.480429 27 22.06762 16.32959 15.4513 14.64303 13.8981 13.21053 11.98671 10.93517 10.02658 9.237223 7.942554 6.935155 6.136364 5.491889 29 22.72672 16.66306 15.74287 14.89813 14.12142 13.40616 12.13711 11.05108 10.11613 9.306567 7.984423 6.960662 6.152038 5.501601 29 23.37608 16.98372 16.02189 15.14107 14.3331 13.59072 12.27767 11.15841 10.19828 9.369606 8.021806 6.983037 6.16555 5.509831 30 24.01584 17.29203 16.28889 15.37245 14.53375 13.76483 12.40904 11.25778 10.27365 9.426914 8.055184 7.0026 64 6.177198 5.516806