Champ Ltd. is authorized to issue $3,000,000 of 4%, 10-year bonds payable. On December 31, 2014?, when the market interest rate is 7%, the company issues $2,400,000 of the bonds. Champ Ltd. amortizes bond discount by the? effective-interest method. The semiannual interest dates are June 30 and December 31.

Requirements

1. Use the PV function in Excel Superscript ®Excel®

to calculate the issue price of the bonds.

2. Prepare a bond amortization table for the first year of the bonds.

3. Record issuance of bonds payable on December 31, 2014?;

the first semiannual interest payment on June 30, 2015?;

and the second payment on December 31, 2015.