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Maharlika Corporation issued a 10-year $1

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Maharlika Corporation issued a 10-year $1.5 million 6% bond. Interest payments will be on a semi-annual basis. The effective rate at the point of sale, January 1, 2005, is 8% and Maharlika closes its accounting records on December 31 of each year.

Instructions:

Prepare the journal entries for:
(a) to record the issuance of the bonds.
(b) to record the first three semi-annual interest payments using the effective interest method to amortize any discount or premium