Celine Dion Company issued $600,000 of 10%, 20-year bonds on January 1, 2009, at 102. Interest is

Question:

Celine Dion Company issued $600,000 of 10%, 20-year bonds on January 1, 2009, at 102. Interest is payable semiannually on July 1 and January 1. Dion Company uses the effective interest method of amortization for bond premium or discount. Assume an effective yield of 9.75%.

Instructions

Prepare the journal entries to record the following. (Round to the nearest dollar.)

(a) The issuance of the bonds.

(b) The payment of interest and related amortization on July 1, 2009.