2. On January 1, 2020, Dawson Inc. issued bonds with a face value of $400,000 and coupon interest rate of 5%. The bonds pay interest semi-annually on July 1 and January 1. The market rate at January...

2. On January 1, 2020, Dawson Inc. issued bonds with a face value of $400,000 and coupon interest rate of 5%. The bonds pay interest semi-annually on July 1 and January 1. The market rate at January 1, 2020 is 4%.

(a) Are the bonds being issued at a premium or a discount?

(b) Prepare the journal entry for the issue, assuming the bonds are issued at 101.4. (No explanation required.)

(c) Record the entry for the first interest payment at July 1, 2020. (No explanation required.)