On January 1, 2020, Ehrlich Corporation issued 8%, 15-year bonds with a face amount of $950,000 at 97. Interest is payable annually on January 1.

Instructions

Prepare the following entries:

1. record the issuance of the bonds on 1/1/20
2. first annual interest accrual on 12/31/20
3. amortization, assuming that the company uses straight-line amortization on 12/31/20
4. payment of interest on 1/1/21
5. What is the unamortized balance of the discount account at 1/1/21?
6. What is the carrying value of the bond at 1/1/21?