E10-7 (Algo) Preparing Journal Entries to Record Issuance of Bonds and Payment of Interest [LO 10-3]

On January 1, Applied Technologies Corporation (ATC) issued $590,000 in bonds that mature in 10 years. The bonds have a stated interest rate of 11 percent. When the bonds were issued, the market interest rate was 11 percent. The bonds pay interest once per year on December 31.

Required:

1. 1. Determine the price at which the bonds were issued and the amount that ATC received at issuance.
2. 2. & 3. Prepare the required journal entries to record the bond issuance and the first interest payment on December 31 assuming no interest has been accrued earlier in the year.