Fundamentals of Financial Accounting 4th Edition by Fred Phillips,Robert Libby,Patricia Libby

Exercise 75

(Supplement 10A) Recording the Effects of a Discount Bond Issue and First Interest Payment and Preparing a Discount Amortization Schedule (Straight-Line Amortization)
On January 1, 2013, when the market interest rate was 9 percent, Seton Corporation completed a $200,000, 8 percent bond issue for $187,163. The bonds were dated January 1, 2013, pay interest each December 31, and mature in 10 years on December 31, 2022. Seton amortizes the bond discount using the straight-line method.
Required:
1. Prepare the journal entry to record the bond issuance.
2. Prepare the journal entry to record the interest payment on December 31, 2013.
3. Prepare a bond discount amortization schedule for these bonds. Round calculations to the nearest dollar.