Sam Aron decided it was time to make a change in his life. For years he tried

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Sam Aron decided it was time to make a change in his life. For years he tried to buck the system, but was tired of dealing with academics who had no business sense on how to teach his classes. He struck out on his own taking advantage of recent changes in laws that made certain plants legal to sell in his state - Soaring Botanical Incorporated was formed

Sam hired you as an accountant so he wouldn't have to deal with the daily debits and credits, allowing him much needed time to cultivate his products He recently came back from a local lender with the following information:

Bond Face Value $10,000

Interest Rate 6%

Payment Frequency Semiannually

Term 3 years

Payment Timing June 30 and December 30

The bonds will be issued on January 1, 2017. Sam has decided that his company will used GAAP accounting with the effective interest rate amortization. On January 1, 2017.bond investors were looking for a rate of return at 8%.

1. Record the initial journal entry

2. Sam comes back in June and asks you about how you recorded the journal entry for the month

3. At the end of the year, record the year end journal

4. Sam asks to show him how the bonds will be shown on the balance sheet at year end

5. Record the journal entry to retire the bonds on January 1, 2020

6. What is the difference between total interest paid and interest expense recorded. Identify the amount of the difference and explain why there is a difference.