Zooba Company issues 9%, five-year bonds dated January 1, 2011, with a $160,000 par value. The bonds

Question:

Zooba Company issues 9%, five-year bonds dated January 1, 2011, with a $160,000 par value. The bonds pay interest on June 30 and December 31 and are issued at a price of $166,494. Their annual market rate is 8% on the issue date.

Required
1. Calculate the total bond interest expense over the bonds’ life.
2. Prepare a straight-line amortization table like Exhibit 14.11 for the bonds’ life.
3. Prepare the journal entries to record the first two interest payments.