Communication Nordbock Inc. reports the following outstanding bond issue on its December 31, 2041, balance sheet: The bonds have been outstanding for five years and were originally issued at face amount. The company is considering redeeming these bonds on January 1, 2012 at 103 and issuing new $1,000,000, 5%, five-year bonds at their face amount. These bonds would pay interest semiannually on June 30 and December 31 Write a brief memo to Liz Nolan, the chief financial officer, discussing the costs of redeeming the existing bonds, the proceeds from issuing the new bonds, and whether this is a good financial decision. 1 On July 1, Year 1, Danzer Industries Inc. issued $40,000,000 of 10-year, 7% bonds at a market (effective) interest rate of 8%, receiving cash of $37,282,062. Interest on the bonds is payable semiannually on December 31 and June 30. The fiscal year of the company is the calendar year. Instructions 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: 1. The first semiannual interest payment on December 31, Year 1, and the amortization of the bond discount, using the straight-line method. Round to the nearest dollar. 2. The interest payment on June 30, Year 2, and the amortization of the bond discount, using the straight-line method. Round to the nearest dollar. 3. Determine the total interest expense for Year 1. 4. Will the bond proceeds always be less than the face amount of the bonds when the contract rate is less than the market rate of interest? 5. (Appendix 1) Compute the price of $37.282,062 received for the bonds by using the present value tables in Arpendix A at the end of the text. Round to the nearest dollar