Summit Limited issued $8,000,000 in bonds on 31 December 2015. The bonds mature on 31 December 2019, and bear interest at 6% per annum, payable every 30 June and 31 December. The bonds were issued to yield 8% per annum. Summit's fiscal year ends on 31 December. Summit uses the effective-interest method of amortization.

Required:

1.

Calculate the proceeds from issuance.

2.

Prepare the effective-interest amortization schedule for the bond.

3.

Prepare the journal entries for the first year of the bond