Team Sports Ltd. is authorized to issue $5,000,000 of 5%, 10-year bonds payable. On December 31, 2012, when the market interest rate is 6%, the company issues $4,000,000 of the bonds and receives cash of $3,702,450. Team Sports Ltd. amortizes bond discount by the effective-interest method. The semiannual interest dates are June 30 and December 31.

Requirements

1. Prepare a bond amortization table for the first four semiannual interest periods.

2. Record issuance of the bonds payable on December 31, 2012; the first semiannual interest payment on June 30, 2013; and the second payment on December 31, 2013.