Cardinal Company sold $600,000 of 15-year, 6 percent notes for $544,824. The notes were sold December 31,

Question:

Cardinal Company sold $600,000 of 15-year, 6 percent notes for $544,824. The notes were sold December 31, 2011, and pay interest semiannually on June 30 and December 31. The effective interest rate was 7 percent. Assume Cardinal uses the effective interest rate method.

Required:
1. Prepare the entry to record the sale of the notes.
2. Determine the amount of the semiannual interest payments for the notes.
3. Prepare the amortization table through 2013 (Note: Round to the nearest dollar).
4. Prepare the entry for Cardinal’s journal at June 30, 2012, to record the payment of six months’ interest and the related interest expense.
5. Determine interest expense for 2013.