Family General Stores Inc. is authorized to issue $500,000 of 7%, 10-year bonds. On December 31, 2014, when the market interest rate is 8%, the company issues $400,000 of the bonds and receives cash of $372,660. Family General amortizes bonds by the effective interest method. The semi-annual interest dates are January 31 and July 31.
Requirements
1. Prepare a bond amortization table for the first four semi-annual interest periods.
2. Record issuance of the bonds on December 31, 2014, and the semi-annual interest payments on January 31, 2015, and on July 31, 2015.