On January 1, 2018, Wildcat Company spent $80,695.66 to purchase bonds with face value of 100,000. The stated rate on the bonds are 7%. The bonds are to be held to maturity. The bonds pay interest semiannually on June 30 and December 31. These bonds will mature in 5 years since the date of purchase.

Required:

1. Prepare the appropriate journal entry to record the acquisition of the bonds.
2. What is the annual YTM?

(3.) Record the first two interest payments.