Ryan Corporation sold and issued $75,000 of three-year, 8 percent (payable semiannually) bonds payable for $78,200 plus accrued interest. Interest is payable each February 28 and August 31. The bonds were dated March 1, 2018, and were sold on July 1, 2018. The accounting period ends on December 31.
Required:
1. How much accrued interest should be recognized at date of sale?
2. How long is the amortization period?
3. Give entries for Ryan Corporation through February 2019. Use straight-line amortization.
4. Would the above amounts also be recorded by the investor if the intent was to hold the bonds to maturity? Explain.