REVIEW EXERCISES 1. (L0. 1 and 2) Schmidt Corporation purchased $100,000 of 10%, 10-year bonds on January 1, 2014, with interest payable on July 1, and January 1. The bonds are to be classied as available-forsale securities. The bonds sell for $88,530 which results in a bond discount of $11,420 and an effective interest rate of 12%. At December 31, 2014, the fair value and the carrying amount of the bonds are equal. Instructions: a. Prepare the entry to record the purchase of the bonds on January 1, 2014. b. Prepare a schedule of interest revenue and bond discount amoltization effective interest method for the periods L'l4, 711314, W15 and 7;\" 1f 15. c. Prepare the journal entries to record interest revenue on July 1, 2014 and December 31, 2014. d. On July 1, 2015, Schmidt Corporation sells the bonds for $88,000. Prepare the journal entry recording interest revenue on that date and another entry to record the sale. General Journal Account Title