On June 1, 2005, Jefferson Controls, Inc. issued $12,000,000 of 10 percent bonds to yield 12 percent. Interest is payable semiannually on May 31 and November 30. The bonds mature in 15 years. Jefferson Controls, Inc. is a calendar-year corporation.
(1) Determine the issue price of the bonds. Show computations.
(2) Prepare an amortization table through the first two interest periods using the effective-interest method.
(3) Prepare the journal entries to record bond-related transactions as of the following dates:
(a) June 1, 2005
(b) November 30, 2005
(c) December 31, 2005
(d) May 31, 2006
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