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  3. 1.         fast tires issued $5,000,000 o

1.         Fast Tires issued $5,000,000 of five-year, 10% bonds on June 30, 20Y5, for $5,405,550. The bonds pay...

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Accounting

1.         FastTires issued $5,000,000 of five-year, 10% bonds on June 30, 20Y5,for $5,405,550. The bonds pay interest quarterly, beginningSeptember 30, 20Y5. At the date of issuance, the market rate was8%. Calculate the interest expense and bond amortization for thefirst fiscal year using the:

a.Straight-line method for amortization

b. Effective interest rate method foramortization

Use the information above to prepare the journal entries torecord the issuance, first interest payment, and retirement of thebonds for Fast Tires. Assume the company uses the straight-linemethod for amortization.

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