Question 3

On January 31, 2016 Muscle Sports Cars issued 10-year, 4% bonds with a face value of $100,000. The bonds were issued at 94 and pay interest on January 31 and June 30. Muscle amortizes their bonds by the straight-line method.

1. Record (a) issuance of the bonds on January 31, (b) the semi-annual interest payment and discount

amortization on June 30, and (c) the interest accrual and discount amortization on December 31.