On May 1, 2011, Jadeja Corporation, a publicly listed corporation, issued $200,000 of five-year, 8% bonds, with interest payable semi-annually on November 1 and May 1. The bonds were issued to yield a market interest rate of 6%. Jadeja uses the effective interest method.
(a) Calculate the present value (issue price) of the bonds on May 1.
(b) Record the issue of the bonds on May 1.
(c) Prepare the journal entry to record the first and second interest payments on November 1, 2011, and May 1, 2012.