On January 1, 2011, Clearwater Corporation sold a $750,000, 8 percent bond issue (9 percent market rate). The bonds were dated January 1, 2011, pay interest each December 31, and mature in 10 years.

Required:

1. Give the journal entry to record the issuance of the bonds.

2. Give the journal entry to record the interest payment on December 31, 2011. Use straight-line amortization.

3. Show how the interest expense and the bonds payable should be reported on the December 31, 2011, annual financial statements.