Three independent situations follow:
1. Second Time Around Corp. (STAC) issued $7,000,000 in stripped (zero-coupon) bonds that mature in eight years. The market rate of interest for bonds of a similar nature is 4.8% compounded monthly. Four and a half years after issue, when the market rate was 3.6%, STAC repurchased $3,000,000 of the bonds on the open market. STAC accrues interest monthly. Bonds are carried at amortized cost.

2. The Friendly Car Dealer sold $4,000,000 of five-year bonds that pay the then-current market rate of interest of 3% annually on December 31. The bonds are dated January 1, 2019, but were not issued until March 1, 2019. Friendly’s year-end is December 31. Friendly has adopted a policy of crediting interest expense for the interest accrued up to the date of sale.

3. On January 1, 2019, Creative Geniuses Ltd. (CGL) sold $3,000,000 of three-year, 5% bonds priced to yield 5.5%. Interest is payable on June 30 and December 31 each year.

Required:
a. Prepare journal entries to record:
i. The sale and retirement of the bonds in Scenario 1.
ii. The sale of the bonds in Scenario 2 and payment of interest on December 31, 2019.
iii. The sale of the bonds in Scenario 3.
b. Prepare a schedule of interest expense and bond amortization during the life of the bond in Scenario 3.