On April 1 of the current year, Allen Company issues $2,000,000 of 8%, 5-year bonds, with interest payments made each October 1 and April 1. The bonds are issued at 98. Allen Company amortizes any premium or discount using the straight-line method.
a. Prepare the journal entry on April 1 to issue the bonds.
b. Prepare the journal entry on October 1 to record the payment of interest and the amortization of any discount or premium.
c. Prepare the journal entry on December 31 to record accrued interest and the amortization of any discount or premium.