Accounting for long-term bonds. The notes to the financial statements of Aggarwal Corporation for Year 4 reveal the following information with respect to long-term debt. All interest rates in this problem assume semiannual compounding and the effective interest method of amortization.

a. Compute the book value of the zero coupon notes on December 31, Year 4. A zero coupon note requires no periodic cash payments; only the face value is payable at maturity. Do not overlook the italicized sentence above.

b. Compute the amount of interest expense for Year 4 on the 7 percent bonds.

c. On July 1, Year 4, Aggarwal Corporation acquires half of the 9-percent bonds ( \(\$ 500,000\) face value) in the market for \(\$ 526,720\) and retires them. Give the journal entry to record this retirement.

d. Compute the amount of interest expense on the 9 -percent bonds for the second half of Year 4.

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December 31, Year 3 December 31, Year 4 $800,000 zero coupon notes due December 31, Year 13, initially priced to yield 10 percent. $1,000,000, 7 percent bonds due December 31, Year 8. Interest is payable on June 30 and December 31. The bonds were initially priced to yield 8 percent... $1,000,000, 9 percent bonds due December 31, Year 19. Interest is payable on June 30 and December 31. The bonds were initially priced to yield 6 percent. $ 301,512 ? ? $966,336 $1,305,832 ?