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On January 1, Winfree Motors, Inc. issued 1,000, $1,000 bonds to finance a new showroom....

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Accounting

On January 1, Winfree Motors, Inc. issued 1,000, $1,000 bonds to finance a new showroom. The bonds are 5-year, 4% bonds that pay interest on December 31 each year. When issued, the market rate of interest on similar bonds was 6% and the bonds are due December 31, Year 5.

Required:

1. Compute the selling price of the bonds.

2. Prepare the entry to record the sale of the bonds.

3. Prepare the first two years of the amortization table for the bonds.

4. Prepare the journal entries for the first annual interest payment and the final repayment of the bonds.

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