1. Young Co. issues $800,000 of 10% bonds dated January 1, Year 1. Interest is payable semiannually on June 30 and December 31. The bonds mature in 5 years. The current market rate for similar bonds is 8%. The entire issue is sold on the date of issue. The following values are given:

	Present Value of Ordinary Annuity	Present Value of $1
	-------------	-----------
N=10; i=0.04	8.11090	0.67556
N=10; i=0.05	7.72173	0.61391

(i) What amount of proceeds on the sale of bonds should Young report?

A) $799,997

B) $815,564

C) $849,317

D) $864,884

(ii) Prepare the journal entry to issue the bonds

(iii) Prepare the journal entry to record bond interest paid for year 2 using the effective interest method.