Automation, Inc. has three bond issues outstanding at 12/31/16:

Bond A--$1,000,000, 5.5% bonds issued on June 30, 2016, due June 30, 2021. Interest is payable June 30 and December 31. Bonds were initially priced to yield 6%.

Bond B--$1,000,000, 8.0% bonds issued on September 30, 2015, due September 30, 2025. Interest is payable March 31 and September 30. The bonds were initially priced to yield 7.5%.

Bond C --$1,000,000 zero-coupon bonds issued on Janaury 1, 2016 due December 31, 2025, initially priced to yield 6%. Interest is compounded semiannually.

Required:Hint: You may find that preparing an amortization table will make this problem easier.Round all answers tothe nearest dollar.

1.Prepare the journal entries necessary to record the 2016 activity.

2.For each bond, show what would have appeared on the December 31, 2016 and 2017 financial statements. Assume the statement of cash flow is prepared using the direct method. Be sure to show the proper description and classification for each item.