Ralston Corp. recently issued $1,000,000 of 6% 10-year bonds, yielding a market (yield) rate of 8%. The bonds pay interest semiannually on June 30 and December 31.

a.Calculate the bond issue price and prepare the journal entry to record the issuance(present value tables are included in the 2nd and 3rd tabs of this worksheet)

Bond Issue Price

Debit Credit

b.Calculate the amortization on the bond premium or discount using the effective interest method for the first interest payment, and prepare the journal entry for the first semiannual interest payment and amortization.

Debit. Credit