Netwerk Inc. issued $1,500,000 of 5-percent, 10-year bonds payable and received cash proceeds of $1,388,419 on March 31, 2014. The market interest rate at the date of issuance was 6 percent, and the bonds pay interest semiannually. 1. Did the bonds sell at a premium or a discount? 2. Prepare an effective-interest amortization table for the bond discount, through the first two interest payments. Use Exhibit 15-4 as a guide, and round amounts to the nearest dollar. Students can use a financial calculator if so instructed. 3. Record Netwerk Inc. s issuance of the bonds on March 31, 2014, and on September 30, 2014, payment of the first semiannual interest amount and amortization of the bond discount. Explanations are not required.
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