On January 1, 2005, Larkspur Corporation issued $500,000, 10%, 5-year bonds, at 98. The bonds pay semiannual interest on January 1 and July 1. The company uses the straight-line method of amortization and has a calendar year end.
Prepare all the journal entries that Larkspur Corporation would make related to this bond issue through January 1, 2006. Be sure to indicate the date on which the entries would be made.
The solution explains the journal entries relating to bond issue