Determine the present value of a five-year, $1,000, 6-percent bond that sold for a yield of 7 percent (the effective interest rate). Interest is paid annually. Prepare a bond amortization schedule. Prepare the entries to record the liability of the bond issued, the interest charges each year, and the payment of the principal.

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Value of Bond Beginning Period of Period of Period 1 234 N 5 Interest Expense Expense Interest for Period Payable Amount Subtracted from Discount or Premium Value of Bond End of Period