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

HOW QUA VUMS WOR: PAGE 2016 PAGE 2017 GENERAL JOURNAL Score: 137/193 DATE POST. REF. DEBIT CREDIT Jan. 01 ACCOUNT TITLE Cash Deferred Bond Issue Costs Discount on Bonds Payable Bonds Payable 8,312.46 700,000.00 Dec. 31 Interest Expense Discount on Bonds Payable Cash Discount on Bonds Payable Dec. 31 Interest Expense 1.662.49 Deferred Bond Issue Costs 1,662.49 How does grading work? PAGE 2016 PAGE 2017 GENERAL JOURNAL Score: 137/193 ACCOUNT TITLE POST. REF. DEBIT CREDIT DATE Dec. 31Cash Interest Expense Discount on Bonds Payable Interest Expense Dec. 31 1,662.49 Deferred Bond Issue Costs 1,662.49