Campbell inc. produces and sells outdoor equipment. On July 1, Year 1, Campbell issued $25,000,000 of 10-year, 10% bonds at a market (effective) interest rate of 9%, receiving cash of $26,625,925. 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, Year 1. . 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.) b. The interest payment on June 30 , Year 2 , and the amortization of the bond promium, using the straight-line method. (Round to the nearost dollar.) 3. Determine the fotal interest expense for Year 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 $26,625,925 received for the bonds by using the present value tablos. (Round to the nearest dollar.) - Refer to the Chart of Accounts for exact wording of account bites. Two present value tables are provided: Present Value of $1 at Compound Interest Due in n Periods and Present Value of Ordinary Annuity of $1 per Period. Use them as directed in the problem requirements. Present Value Tables Present Value of Ordinary Annuity of \$1 per Period \begin{tabular}{ccccccccc} \hline Periods & 4.0% & 4.5% & 5% & 5.5% & 6% & 6.5% & 7% \\ \hline 1 & 0.96154 & 0.95694 & 0.95238 & 0.94787 & 0.94340 & 0.93897 & 0.93458 \\ \hline 2 & 1.88609 & 1.87267 & 1.85941 & 1.84632 & 1.83339 & 1.82063 & 1.80802 \\ \hline 3 & 2.77509 & 2.74896 & 2.72325 & 2.69793 & 2.67301 & 2.64848 & 2.62432 \\ \hline 4 & 3.62990 & 3.58753 & 3.54595 & 3.50515 & 3.46511 & 3.42580 & 3.38721 \\ \hline 5 & 4.45182 & 4.38998 & 4.32948 & 4.27028 & 4.21236 & 4.15568 & 4.10020 \\ \hline 6 & 5.24214 & 5.15787 & 5.07569 & 4.99553 & 4.91732 & 4.84101 & 4.76654 \\ \hline 7 & 6.00205 & 5.89270 & 5.78637 & 5.68297 & 5.58238 & 5.48452 & 5.38929 \\ \hline 8 & 6.73274 & 6.59589 & 6.46321 & 6.33457 & 6.20979 & 6.08875 & 5.97130 \\ \hline 9 & 7.43533 & 7.26879 & 7.10782 & 6.95220 & 6.80169 & 6.65610 & 6.51523 \\ \hline 10 & 8.11090 & 7.91272 & 7.72173 & 7.53763 & 7.36009 & 7.18883 & 7.02358 \\ \hline 11 & 8.76048 & 8.52892 & 8.30641 & 8.09254 & 7.88687 & 7.68904 & 7.49867 \\ \hline 12 & 9.38507 & 9.11858 & 8.86325 & 8.61852 & 8.38384 & 8.15873 & 7.94269 \\ \hline \end{tabular} 1. and 2. Journalize the entries to record the transactions. Refer to the Chart of Accounts for exact wording of account titles. 3. Determine the total interest expense for Year 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? Yes No 5. Compute the price of $26,625,925 received for the bonds by using the present value tabies. (Round to the nearest dollar.)
