On January 1, 2019, Tiny Furniture Company issued $1,000,000 of 10 percent, ten-year bonds with an effective yield of 12 percent. The bonds were dated January 1, 2019, and the proceeds from the issuance of the bonds were $895,141. Interest is payable semiannually on July 1 and January 1. The bonds mature in ten years. Tiny Furniture Company (Tiny) is a calendar-year corporation. Tiny does not make monthly adjusting entries for accrued interest or discount/premium amortization, but rather records interest expense when paid semi-annually and accrues any unpaid interest at year-end. The company uses the effective interest method for the amortization of bond discounts and premiums.

Requirements (note that there are 4 requirements following):

1. Prepare the journal entries necessary to record the Companys (i.e., issuers) bond-related transactions as of the following dates:

1. January 1, 2019 (bond issuance)
2. July 1, 2019 (1st interest payment)
3. December 31, 2019 (year-end accrual)
4. January 1, 2020 (2^nd interest payment)

Answer the following questions:

2. What is the total amount of interest expense that will be reported by Tiny Furniture for the year ended December 31, 2019? _____________

3. What is the total amount of interest paid by Tiny Furniture for the year ended December 31, 2019? _____________

4. Record the same bond transactions in requirement #1 from the perspective of the investor (buyer) who has purchased the bonds.