Company A issued $ 3,000,000 of bonds paying 4% on January 1, 20X6.

• Transaction costs of $ 50,000 were incurred on this date

• The bonds matures in 5 years.

• Interest is paid semi-annually (June 30 and December 31)

• The market rate of interest was 5% at the time of issuance

• Market rate at end of 20X6 is 6%

On December 31, 20X8 Company A repurchased the bonds in the market place when the market interest rate was 5.5%

• For both the amortized cost method and the FV-NI method:

• Prepare the journal entries for 20X6 and for the repurchase on December 31 20X8 (you may assume the market rate at December 31, 20X7 remained at 6%)