On January 1, Hemi Corporation issued $500,000 of 15-year, 10% bonds for $586,460 yielding an effective interest

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Question:

On January 1, Hemi Corporation issued $500,000 of 15-year, 10% bonds for $586,460 yielding an effective interest rate(yield to maturity) of 8%. Interest is paid semi-annually on June 30 and December 31/

Required:

1) Show computations to confirm the issue price.

2) Compute an amortization schedule for the 15 years of the bonds' life.

3) Give Journal entries for: (A) bond issuance, (b) semi-annual interest payment on June 30 of the first year, and (c) the semi-annual interest payment on December 31 of the first year.