Ontario Inc. issued $800,000 of 10-year, 4% bonds on January 1, 2013, when the market interest rate was 5%. Interest is payable semi-annually on July 1 and January 1. Ontario has a December 31 year end. 

Instructions

(a) Calculate the bonds’ issue price.

(b) Record the issue of the bonds.

(c) Prepare an amortization schedule through to December 31, 2014 (four interest periods).

(d) Record the accrual of the interest on December 31, 2014.

(e) Identify what amounts, if any, would be reported as a current liability and a non-current liability with respect to the bonds and bond interest accounts on December 31, 2014.

(f) Record the payment of interest on January 1, 2015?