Question 4.1: On June 30, 2017, Callaghan Inc. issues $5,000,000 face value bonds with a coupon rate of 5% issued to yield 7%. The bonds pay interest semi-annually on June 30 and December 31 and mature 20 years from the date of issuance. Callaghan uses the effect-interest rate method for recording bond amortization. Required:

Prepare the journal entry for the bonds at the date of issuance.

Required: Prepare the journal entry at June 30, 2018.