Recording Bond Issue and First Interest Payment with Premium (Effect-Interest Amortization)

On January 1, 2014, Frog Corporation sold a $2,000,000, 10 percent board issue (8.5 percent market rate).

The bonds were dated January 1,2014, Pay interest each June 30 and december 31, and mature in 10 years.

Required:

1.Give the journla entry to record the issuance of the bonds

2. Give the journal entry to record the interest payment on June 30, 2014. Use effective-interest amortization.

3. Show how the bonds payable should be resported on June 30, 2014, financial statements.

THE ASNWER WAS WRONG IN THE SECTION.