Assume that on December 31, 20X0, Colorado Woolens issued $10 million of 10-year, 10% debentures. Proceeds were $11,359,000; therefore, the market rate of interest was 8%.

1. By using the balance sheet equation format, prepare an analysis of transactions for Colorado Woolens. Key your transactions as follows: (a) issuance, (b) first semiannual interest using effective interest amortization of bond premium, and (c) payment of maturity value. Round all amounts to the nearest thousand.

2. Prepare corresponding journal entries for (a), (b), and (c) in requirement 1.

3. Show how the bond-related accounts would appear on Colorado Woolens’ balance sheets as of December 31, 20X0, and June 30, 20X1. Assume that the semiannual interest payment and amortization have been recorded.

4. Calculate the interest expense for the 6-month period ending December 31, 20X1.