Blue Sky Travel Inc. issues $2,000,000 of ten-year, 8% bonds dated January 1, 2020. Interest is payable on January 1 and July 1 each year. The proceeds realized from the issue were the $1,821,367 sales price less the $20,000 fee charged by Blue Sky's investment bank. Blue Sky's year-end is December 31.
Required:
Prepare journal entries:
a. The issuance of the bonds.
b. Payment of interest and related amortization on July 1, 2020.
c. Accrual of interest and related amortization on December 31, 2020.

Question

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The Answer of Blue Sky Travel Inc. issues $2,000,000 of ten-year, 8% bonds dated January 1, 2020. Interest is payable on January 1 and July 1 each year. The proceeds realized from the issue were the $1,821,367 sales price less the $20,000 fee charged by Blue Sky's investment bank. Blue Sky's year-end is December 31.
Required:
Prepare journal entries:
a. The issuance of the bonds.
b. Payment of interest and related amortization on July 1, 2020.
c. Accrual of interest and related amortization on December 31, 2020.