ABC Company issued $200,000 face value bonds on January 1, 2017, with semiannual interest payments to be made on June 30 and December 31 at a contract rate of 10%. The bonds were scheduled to mature five years after they were issued. On January 1, 2020, three years after the bonds were issued, the company repurchased 40% of the outstanding bonds for $79,000.

Part A

1) Assume that the bonds were issued when the market rate of interest was 9%. Show calculation of issue price.If using the effective interest method of amortization, write a schedule showing the bond interest expense and amounts of amortization for the life of the bonds. If using straight line, show the calculation of the periodic amortization within the appropriate journal entries explanations.

2 )Prepare the journal entry to record the bond issuance.

3) Prepare journal entries for the first two interest payments.

4) Prepare the journal entry to recognize the partial repurchase of the bonds.

Part B

Redo Part A under the assumption that the market rate on the bonds when issued was 16%.