588 Chapter 14 Long-Term Liabilities Problem 14-8AB McFad issues $90,000 of 11%, three-year bonds dated January 1, 2011, that pay interest semiannually on Effective interest amortization of June 30 and December 31. They are issued at $92,283. Their market rate is 10% at the issue date. bond premium; retiring bonds P1 P3 P4 Required 1. Prepare the January 1, 2011, journal entry to record the bonds' issuance. 2. Determine the total bond interest expense to be recognized over the bonds' life. Check (3) 6/30/2012 carrying 3. Prepare an effective interest amortization table like Exhibit 14B.2 for the bonds' first two years. value, $91.224 4. Prepare the journal entries to record the first two interest payments. (5) $2,635 gain 5. Prepare the journal entry to record the bonds' retirement on January 1, 2013, at 98. excel Analysis Component mhhe.com/wildFAP20e 6. Assume that the market rate on January 1, 2011, is 12% instead of 10%. Without presenting numbers, describe how this change affects the amounts reported on McFad's financial statements