On the first day of its fiscal year, Robbins Company issued $1,900,000 of 6-year, 6% bonds to finance its operations of producing and selling home improvement products. Interest is payable semiannually. The bonds were issued at a market (effective) interest rate of 9%, resulting in Robbins Company receiving cash of $1,640,121.
a. Journalize the entries to record the following:
- Issuance of the bonds.
- First semiannual interest payment. (Amortization of discount is to be recorded annually.)
- Second semiannual interest payment.
- Amortization of discount at the end of the first year, using the straight-line method. (Round to the nearest dollar.)