1. Campbell Inc. produces and sells outdoor equipment. On July 1, Year 1, Campbell issued $88,500,000 of 10-year, 11% bonds at a market (effective) interest rate of 9%, receiving cash of $100,011,788. Interest on the bonds is payable semiannually on December 31 and June 30. The fiscal year of the company is the calendar year.

   Required:

   If an amount box does not require an entry, leave it blank.

   1. Journalize the entry to record the amount of cash proceeds from the issuance of the bonds on July 1, Year 1.

   		fill in the blank d497cdfd102cf92_2	fill in the blank d497cdfd102cf92_3
   		fill in the blank d497cdfd102cf92_5	fill in the blank d497cdfd102cf92_6
   		fill in the blank d497cdfd102cf92_8	fill in the blank d497cdfd102cf92_9

   2. Journalize the entries to record the following:

   a. The first semiannual interest payment on December 31, Year 1, and the amortization of the bond premium, using the straight-line method. (Round to the nearest dollar.)

   		fill in the blank 4477d6fb605c075_2	fill in the blank 4477d6fb605c075_3
   		fill in the blank 4477d6fb605c075_5	fill in the blank 4477d6fb605c075_6
   		fill in the blank 4477d6fb605c075_8	fill in the blank 4477d6fb605c075_9

   b. The interest payment on June 30, Year 2, and the amortization of the bond premium, using the straight-line method. (Round to the nearest dollar.)

   		fill in the blank 43df1e0a405ff95_2	fill in the blank 43df1e0a405ff95_3
   		fill in the blank 43df1e0a405ff95_5	fill in the blank 43df1e0a405ff95_6
   		fill in the blank 43df1e0a405ff95_8	fill in the blank 43df1e0a405ff95_9

   3. Determine the total interest expense for Year 1. Round to the nearest dollar. $fill in the blank 44c4d705203c041_1

   4. Will the bond proceeds always be greater than the face amount of the bonds when the contract rate is greater than the market rate of interest?

   5. Compute the price of $100,011,788 received for the bonds by using Exhibit 5 and Exhibit 7. (Round to the nearest dollar.) Your total may vary slightly from the price given due to rounding differences.

   Present value of the face amount	$fill in the blank 44c4d705203c041_3
   Present value of the semi-annual interest payments	$fill in the blank 44c4d705203c041_4
   Price received for the bonds	$fill in the blank 44c4d705203c041_5