Recording Bond Entries and Reporting Bonds$-$ Effective Interest, Straight$-$Line

Master Corp. issued $5\%,$ $$750,000$ bonds on January $1$ of Year $1.$ The bonds pay cash interest semiannually each July $1$ and

January $1$ and were issued to yield $6\%.$ The bonds mature in ten years on January $1,$ and the company uses the effective

interest method to amortize bond discounts or premiums, and that no reversing entries are made.

Required

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

January $1$ of Year $1-$Issuance of bonds.

July $1$ of Year $1-$Interest payment.

December $31$ of Year $1-$Interest accrual.

January $1$ of Year $2-$Interest payment.

b$.$ Answer part a assuming instead that the company uses the straight$-$line interest method to amortize discounts and

premiums and the bonds were sold on March $1$ of Year $1$ for $$693,705($excluding accrued interest$).$ Hint. Amortize discount or

bonds payable over a $118-$month bond term.

Effective Interest Method

Note: Round your answers to the nearest whole dollar.