On January 1, 2010, Potter Corporation issued $800,000, 9%, 5-year bonds for $769,112. The bonds were sold

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Question:

On January 1, 2010, Potter Corporation issued $800,000, 9%, 5-year bonds for $769,112. The bonds were sold to yield an effective-interest rate of 10%. Interest is paid semiannually on June 30 and December 31. The company uses the effective-interest method of amortization.

Required:

Prepare the journal entries that Potter Corporation would make on January 1, June 30, and December 31, 2010, related to the bond issue.