Southwest Corporation issued bonds with the following details: Face value: $660,000 Interest: 9 percent per year payable each December 31 Terms: Bonds dated January 1, 2012, due five years from that date

The annual accounting period ends December 31. The bonds were issued at 104 on January 1, 2012, when the market interest rate was 8 percent. Assume the company uses straight-line amortization and adjusts for any rounding errors when recording interest expense in the final year.

Required: 1. Compute the issue price of the bonds. TIP: The issue price typically is quoted at a percentage of face value. Required: 2. Prepare the journal entry to record the issuance of the bonds and the payment of interest on Dec. 31, 2012 and 2013 Record the issuance of bonds with a face value of $660,000 at 104 Record the interest payment on December 31, 2012. Record the interest payment on December 31, 2013. Required: 3. How much interest expense would be reported on the income statement for 2012 and 2013? Required: 4. Compute the bond value which should be reported on the balance sheet at Dec. 31 2013 ad 2013