$3.)$Accounts and Notes Payable. $(10$ points$)$

Described below are certain transactions of Lamar Company for $2018$:

$1.$ On May $10,$ the company purchased goods from Fox Company for $$75,000,$ terms $2/10,$ n$/30.$ Purchases and accounts payable are recorded at net amounts. The invoice was paid on May $18.$

$2.$ On June $1,$ the company purchased equipment for $$150,000$ from Rao Company, paying $$50,000$ in cash and giving a one$-$year, $9\%$ note for the balance.

$3.$ On September $30,$ the company discounted at $10\%$ its $$300,000,$ one$-$year zero$-$interest$-$bearing note at Virginia State Bank.

Instructions

$($a$)$ Prepare the journal entries necessary to record the transactions above using appropriate dates.

$($b$)$ Prepare the adjusting entries necessary at December $31,2018$ in order to properly report interest expense related to the above transactions. Assume straight$-$line amortization of discounts.

$($c$)$ Indicate the manner in which the above transactions should be reflected in the Current Liabilities section of Lamar Company's December $31,2018$ balance sheet.

$4.)$ Bond issue price and premium amortization. $(10$ points$)$

On January $1,2018,$ Piper Co$.$ issued ten$-$year bonds with a face value of $$5,000,000$ and a stated interest rate of $10\%,$ payable semiannually on June $30$ and December $31.$ The bonds were sold to yield $12\%.$ Table values are:

Present value of $1$ for $10$ periods at $10\%\mathrm{.}386$

Present value of $1$ for $10$ periods at $12\%\mathrm{.}322$

Present value of $1$ for $20$ periods at $5\%\mathrm{.}377$

Present value of $1$ for $20$ periods at $6\%\mathrm{.}312$

Present value of annuity for $10$ periods at $10\%6\mathrm{.}145$

Present value of annuity for $10$ periods at $12\%5\mathrm{.}650$

Present value of annuity for $20$ periods at $5\%12\mathrm{.}462$

Present value of annuity for $20$ periods at $6\%11\mathrm{.}470$

Instructions

$($a$)$ Calculate the issue price of the bonds.

$($b$)$ Without prejudice to your solution in part $($a$),$ assume that the issue price was $$4,420,000.$ Prepare the amortization table for $2018,$ assuming that amortization is recorded on interest payment dates using the effective$-$interest method.