1. On January 1, 2017, Shay issues $270,000 of 9%, 15-year bonds at a price of 97.00. Six years later, on January 1, 2023, Shay retires 30% of these bonds by buying them on the open market at 105.00. All interest is accounted for and paid through December 31, 2022, the day before the purchase. The straight-line method is used to amortize any bond discount.

- What is the carrying (book) value of the bonds and the carrying value of the 30% soon-to-be-retired bonds as of the close of business on December 31, 2022?

2. Sylvestor Company issues 10%, five-year bonds, on December 31, 2016, with a par value of $160,000 and semiannual interest payments.

Semiannual Period-End			Unamortized Discount			Carrying Value
(0)	12/31/2016		$	8,300		$	151,700
(1)	6/30/2017			7,470			152,530
(2)	12/31/2017			6,640			153,360

Use the above bond amortization table and prepare journal entries to record (a) the issuance of bonds on December 31, 2016; (b) the first interest payment on June 30, 2017; and (c) the second interest payment on December 31, 2017.

3. Enviro Company issues 10%, 10-year bonds with a par value of $250,000 and semiannual interest payments. On the issue date, the annual market rate for these bonds is 12%, which implies a selling price of 88 1/2.

- What is the per value x price = selling price ?

4. Montclair Company is considering a project that will require a $620,000 loan. It presently has total liabilities of $160,000, and total assets of $680,000.

- Compute Montclairs (a) present debt-to-equity ratio and (b) the debt-to-equity ratio assuming it borrows $620,000 to fund the project.