On January 1 of the current year, a company issued bonds dated January 1 with a par value of $800,000. The bonds mature in 5 years. The contract rate of interest is 12%, and interest is paid semiannually on June 30 and December 31. The bonds are sold for $760,000. The company uses the straight-line method of amortization. Required: (a) Prepare the journal entry to record issuance of the bonds on January 1 of the current year (6 points possible). (b) Prepare the journal entry to record the first interest payment on June 30 of the current year (6 points possible). Answer

On January 1 of the current year, a company issued bonds dated January 1 with a par value of $800,000. The bonds mature in 5 years. The contract rate of interest is 12%, and interest is paid semiannually on June 30 and December 31. The bonds are sold for $760,000. The company uses the straight-line method of amortization. Required: (a) Prepare the journal entry to record issuance of the bonds on January 1 of the current year (6 points possible). (b) Prepare the journal entry to record the first interest payment on June 30 of the current year ( 6 points possible)