On January 1, 2016, Knorr Corporation issued $700,000 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 $8,312.46.

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

GENERAL JOURNAL Score: 181/193 DATE ACCOUNT TITLE POST. REF. DEBIT CREDIT 1 Jan. 01 Cash 671,298.62 28.701.38 2 Discount on Bonds Payable 3 700,000.00 Bonds Payable Jan. 01 Deferred Bond Issue Costs 4 8,312.46 5 Cash 8,312.46 6 Dec. 31 Interest Expense 46,990.90 7 Cash 42.000.00 8 4,990.90 9 Discount on Bonds Payable Dec. 31 Interest Expense Deferred Bond Issue Costs 1,662.49 10 1,662.49 Points: 33.76 / 36 Feedback Check My Work PAGE 2016 PAGE 2017 GENERAL JOURNAL Score: 181/193 DATE ACCOUNT TITLE POST. REF. DEBIT CREDIT 1 Dec. 31 Interest Expense 47,340.27 2 Cash 42,000.00 3 5,340.27 4 Dec. 31 Discount on Bonds Payable Interest Expense Deferred Bond Issue Costs 1.662.49 5 1,662.49 Points: 33.76 / 36