Recording Bond Entries and Preparing an Amortization Schedule$-$ Effective Interest Method, Discount, Interest Accrual

Mitchell Inc. issued $160$ of its $6\%,$$$1,000$ bonds on January $1$ of Year $1.$ The bonds pay cash interest semiannually each July $1$ and January $1$ and were issued to yield $7\%.$ The bonds mature in three years on December $31,$ and the company uses the effective interest method to amortize bond discounts or premiums.

Required

a$.$ Determine the selling price of the bonds.

b$.$ Prepare an amortization schedule for the first year of the bond term.

c$.$ Prepare journal entries on the following dates.

January $1$ of Year $1,$ bond issuance.

July $1$ of Year $1,$ interest payment.

December $31$ of Year $1,$ interest accrual.

January $1$ of Year $2,$ interest payment. $($No reversing entries made.$)$

Amortization Schedule

Journal Entries

Note Round amount to the nearest dollar.

a$.$ Selling price of bonds

$$0$

Note: Round amounts in Schedule to the nearest whole dollar.

Note: Do not use negative signs.

$\backslash$table$[[$Date$,,$Cash,Interest Expense,Discount Amortization,,Bonds Payable, Net$],[$Jan$.1,$ Year $1,,,,,$$$,0x$