On January 1, 2018, Fragrance Corporation issues $400,000 bonds at 105. The stated rate was 10% and the effective rate was 8%. Interest is payable semiannually on June 30 and December 31.

1. Prepare the entry for the issue of this bond.
2. Also prepare an amortization schedule for the first two interest payments using the effective interest method.

You MUST show all calculations. Round to the nearest whole dollar. Do not forget journal entry descriptions.