On January 1, 2019, Timber Corporation issued $800,000, 6%, 5-year bonds for $735,110. The bonds were sold to yield an effective-interest rate of 8%. Interest is paid annually on January 1. The company uses the effective-interest method of amortization. Instructions: (a) Prepare a bond discount amortization schedule which shows the amortization of discount for the first two interest payment dates. (Round to the nearest dollar). (b) Prepare the journal entries that Timber Corporation would make on January 1 and December 31, 2017 and January 1, 2018, related to the bond issue.(including explanations).
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