*P11-8B Karjala Corporation sold $5,000,000, 8%, 10-year bonds on January 1, 2008.The bonds

Price: $2.50


Karjala Corporation sold $5,000,000, 8%, 10-year bonds on January 1, 2008.The bonds
were dated January 1, 2008, and pay interest on July 1 and January 1. Karjala Corporation uses
the straight-line method to amortize bond premium or discount. Assume no interest is accrued
on June 30.

Instructions
(a) Prepare all the necessary journal entries to record the issuance of the bonds and bond interest
expense for 2008, assuming that the bonds sold at 103.
(b) Prepare journal entries as in part (a) assuming that the bonds sold at 96.
(c) Show balance sheet presentation for each bond issue at December 31, 2008.