The Cotton Corporation issued $100,000 of 10% bonds dated January 1, 2007 for $97,158.54 on July 1,

Question:

The Cotton Corporation issued $100,000 of 10% bonds dated January 1, 2007 for $97,158.54 on July 1, 2007. The bonds are due December 31, 2010, were issued to yield 11%, and pay interest semiannually on June 30 and December 31. The company uses the effective interest method of amortization.

Required

Record

(1) The issuance of the bonds, and

(2) The payment of interest and the discount amortization on December 31, 2007, June 30, 2008, and December 31, 2008.

Corporation
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may...