Campbell Inc. produces and sells outdoor equipment. On July $1,20$Y$1,$ Campbell issued $$73,900,000$ of $10-$year, $11\%$ bonds at a market $($effective$)$ interest rate of $9\%,$ receiving cash of $$83,512,668.$ Interest on the bonds is payable semiannually on December $31$ and June $30.$ The fiscal year of the company is the calendar year.

Required:

$1.$ Journalize the entry to record the amount of cash proceeds from the issuance of the bonds on July $1,20$Y$1.$

$2.$ Journalize the entries to record the following:

a$.$ The first semiannual interest payment on December $31,20$Y$1,$ and the amortization of the bond premium, using the straight$-$line method.

b$.$ The interest payment on June $30,20$Y$2,$ and the amortization of the bond premium, using the straight$-$line method.

$3.$ Determine the total interest expense for $20$Y$1.$

$4.$ 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 $$83,512,668$ received for the bonds

CHART OF ACCOUNT

Campbell Inc.

General Ledger

ASSETS

$110$ Cash

$111$ Petty Cash

$121$ Accounts Receivable

$122$ Allowance for Doubtful Accounts

$126$ Interest Receivable

$127$ Notes Receivable

$131$ Merchandise Inventory

$141$ Office Supplies

$142$ Store Supplies

$151$ Prepaid Insurance

$191$ Land

$192$ Store Equipment

$193$ Accumulated Depreciation$-$Store Equipment

$194$ Office Equipment

$195$ Accumulated Depreciation$-$Office Equipment

LIABILITIES

$210$ Accounts Payable

$221$ Salaries Payable

$231$ Sales Tax Payable

$232$ Interest Payable

$241$ Notes Payable

$251$ Bonds Payable

$252$ Discount on Bonds Payable

$253$ Premium on Bonds Payable

EQUITY

$311$ Common Stock

$312$ Paid$-$In Capital in Excess of Par$-$Common Stock

$315$ Treasury Stock

$321$ Preferred Stock

$322$ Paid$-$In Capital in Excess of Par$-$Preferred Stock

$331$ Paid$-$In Capital from Sale of Treasury Stock

$340$ Retained Earnings

$351$ Cash Dividends

$352$ Stock Dividends

REVENUE

$410$ Sales

$610$ Interest Revenue

$611$ Gain on Redemption of Bonds

EXPENSES

$510$ Cost of Merchandise Sold

$515$ Credit Card Expense

$516$ Cash Short and Over

$521$ Sales Salaries Expense

$522$ Office Salaries Expense

$531$ Advertising Expense

$532$ Delivery Expense

$533$ Repairs Expense

$534$ Selling Expenses

$535$ Rent Expense

$536$ Insurance Expense

$537$ Office Supplies Expense

$538$ Store Supplies Expense

$541$ Bad Debt Expense

$561$ Depreciation Expense$-$Store Equipment

$562$ Depreciation Expense$-$Office Equipment

$590$ Miscellaneous Expense

$710$ Interest Expense

$711$ Loss on Redemption of Bondsy using the present value tables.