On January 1, 2014, Clearwater Corporation sold a $750,000, 8 percent bond issue (9 percent market rate). The bonds were dated January 1, 2014, pay interest each December 31, and mature in 10 years.
1. Give the journal entry to record the issuance of the bonds.
2. Give the journal entry to record the interest payment on December 31, 2014. Use straight-line amortization.
3. Show how the interest expense and the bonds payable should be reported on the December 31, 2014, annual financial statements.