This problem continues the Daniels Consulting situation from Problem P13-47 of Chapter 13. Daniels Consulting is considering raising additional capital. Daniels plans to raise the capital by issuing $500,000 of 8%, seven-year bonds on January 1, 2017. The bonds pay interest semiannually on June 30 and December 31. On January 1, 2017, the market rate of interest required by investors for similar bonds is 10%.
1. Will Daniels’s bonds issue at face value, a premium, or a discount?
2. Calculate and record the cash received on the bond issue date.
3. Journalize the first interest payment on June 30 and amortize the premium or discount using the straight-line amortization method.