On January 1, 2020, Bennett Corporation issued one 4-year, 10% (stated rate), $1,000 bond at a price which would yield the purchaser an 8% return. Payment of interest is made on December 31. The year end is December 31. The company uses the 'effective interest' method to account for bond interest.

Required:

1. Prepare the entry to record the sale of the bond on January 1, 2020.

1. Prepare the entry on December 31, 2020.
2. Assume that Bennett used the 'straight-line' method to account for bond interest. Record the journal entry for 2021 to account for interest.
3. Assume that Bennett repurchased the bond for $1,120 on January 1, 2021. Prepare the journal entry to record the repurchase. (Company had used the 'effective interest' method.)