Question: On February 1, 2011, Lagune & Sons issued 9% bonds dated February 1, 2011, with a face amount of $200,000. The bonds sold for $182,841

On February 1, 2011, Lagune & Sons issued 9% bonds dated February 1, 2011, with a face amount of $200,000. The bonds sold for $182,841 and mature in 20 years. The effective interest rate for these bonds was 10%. Interest is paid semiannually on July 31 and January 31.

Lagune's fiscal year is the calendar year.

Required:

1. Prepare the journal entry to record the bond issuance on February 1, 2011.

2. Prepare the entry to record interest on July 31, 2011, using the effective interest method.

3. Prepare the necessary journal entry on December 31, 2011.

4. Prepare the necessary journal entry on January 31, 2012.

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