Winter

Ltd. is authorized to issue

$2,500,000

of

4%,

10-year

bonds payable. On December 31,

2018,

when the market interest rate is

5%,

the company issues

$2,000,000

of the bonds.

Winter

amortizes bond discount using the effective-interest method. The semiannual interest dates are June 30 and December 31.

Requirements

1.	Use the PV function in Excel to calculate the issue price of the bonds.
2.	Prepare a bond amortization table for the first year of the bonds.
3.	Record the issuance of the bonds payable on December 31, 2018; the first semiannual interest payment on June 30, 2019; and the second payment on December 31, 2019.