1. Serotta Corporation is planning to issue bonds with a face value of $300,000 and a coupon rate of 12%. The bonds mature in 2 years and pay interest quarterly, every March 31, June 30, September 30 and December 31. The bonds were sold on January 1, 2000. Serotta uses the effective-interest amortization method. Assume an annual interest rate of 8%. (90 POINTS)

Required:

1. Provide the journal entry to record the issuance of the bonds
2. Provide the journal entries to record the interest payments during 2001 on March 31, June 30, September 30 and December 31.
3. What bonds payable amount will Serotta report on the December 31, 2000 Balance Sheet?

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