Answer:
$1,820,000 million in bonds issued January 1, 2022
coupon rate 6%
maturity = 10 years x 2 = 20 periods
market interest rate = 7%
1) January 1, 2022, bonds issued at a discount
Dr Cash 1,692,171
Dr Discount on bonds payable 127,829
Cr Bonds payable 1,820,000
2) December 31, 2022, accrued interests on bonds payable
Dr Interest expense 118,452
Cr Interest payable 109,200
Cr Discount on bonds payable 9,252
amortization of bond discount = ($1,692,171 x 7%) - $109,200 = $9,252
3) January 1, 2023, first coupon payment
Dr Interest payable 109,200
Cr Cash 109,200
4) December 31, 2023, accrued interests on bonds payable
Dr Interest expense 119,100
Cr Interest payable 109,200
Cr Discount on bonds payable 9,900
amortization of bond discount = ($1,701,423 x 7%) - $109,200 = $9,900
