On January 1, 2021 the ZOOM Aircraft Company purchased 10% bonds having a maturity value of $100,000 due in 5 years. The bonds pay interest every January 1st. ZOOM Aircraft paid a premium for the bonds in the amount of $7,985.10. As a result of paying the $7,985.10 premium, the bond investment provides Zoom Aircraft with an 8% yield.

Required:

Prepare journal entries for the following dates:

a. January 1, 2021 when the bonds were purchased.

b. December 31, 2021 to record interest revenue and amortization.

c. January 1, 2022 to record the interest payment being received.

d. December 31, 2022 to record interest revenue and amortization.

e. January 1, 2023 to record the interest payment being received.