Question: Pretzelmania, Inc., issues 7%, 15-year bonds with a face amount of $70,000 for $64,008 on January 1, 2015. The market interest rate for bonds of

Pretzelmania, Inc., issues 7%, 15-year bonds with a face amount of $70,000 for $64,008 on January 1, 2015. The market interest rate for bonds of similar risk and maturity is 8%. Interest is paid annually on December 31.
1. Record the bond issue.
2. Record the first interest payment on December 31, 2015. Interest expense is 8% times the carrying value of $64,008.

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