(Learning Objective 2: Issue bonds payable (discount), and record interest payments and the…

(Learning Objective 2: Issue bonds payable (discount), and record interest payments and the related bond amortization using the effective-interest method) Colorado Sports Ltd. is authorized to issue $5,000,000 of 4%, 10-year bonds payable. On December 31, 2014, when the market interest rate is 4.5%, the company issues $3,200,000 of the bonds. Colorado Sports amortizes bond discount by the effective-interest method. The semiannual interest dates are June 30 and December 31.