On December 31, 2017, when the market interest rate is 8 percent, Churchill Land Corporation issues $600,000 of 10-year, 7.25 percent bonds payable. The bonds pay interest semi-annually.

Required

1. Determine the present value of the bonds at issuance using the tables in this appendix.

2. Assume that the bonds are issued at the price computed in Requirement 1. Prepare an effective-interest method amortization table for the first two semi-annual interest periods.

3. Using the amortization table prepared in Requirement 2, journalize the issuance of the bonds and the first two interest payments.