Free Response. Clearly show all work for partial credit. When using a financial calculator, be sure to indicate the inputs used for calculations. (70 points) Each part is worth up to 7 points. 1. S tarCenter Co. is building a new music arena at a cost of $5.600,000. It received a down yment of $600,000 from local businesses to support the project, and now needs to borrow $5.000,000 to complete the project. It therefore decides to issue $5,000,000 of 8%, 20-ye annually on each January 1 . The bonds yield 10%. StarCenter paid $60,000 in bond issue costs related to the bond sale ar bonds. These bonds were issued on January 1,2013, and pay interest Instructions (a) Calculate the issue price of the bond. Show all inputs for the calculation. (b) Prepare a bond amortization schedule up to and including January 1, 2017, using the effective interest rate method. Bond issue costs are amortized on a straight-line basis over the life of the bond. issue costs incurred on January 1,2013 of December 31,2013, including recognition of interest expense, amortization of (c) Prepare the journal entry to record the issuance of the bonds and the related bond (d) StarCenter adjusts and closes its books on a calendar year basis. Record the accrual as (e) Prepare a partial balance sheet presentation of the long-term liability section for this (f) Assume that on July 1 , 2016, StarCenter Co. retires 40% of the bonds at a cost of discount or premium, related cash interest, and amortization of bond issue costs. bond at December 31,2013 $2,040,000 plus accrued interest. Calculate the gain or loss for the retirement Prepare the journal entry to record this retirement. a. b. On June 1, 2014 MAC Co. issued bonds payable with a face value of $600,000, which are dated January 1, 2014, are sold at 98 plus accrued interest. They are coupon bonds, bear interest at 8% (payable annually at January 1), and mature January 1, 2024. 2. Adjusting entries are made on December 31, 2014 to record the accrued interest on the bonds, and the amortization of the proper amount of discount. (Use straight-line amortization. Note that the life of the bond is 115 months as it was issued on June 1 not Jan 1; Use 115 months for all amortization calculations). Interest on the bonds is paid on January 1, 2015 Instructions: (a) Calculate the amount of purchased interest. (b) Record the journal entry to issue the bonds and the purchased interest on June 1, 2014. (c) Prepare the adjusting entry as of December 31, 2014 for the interest expense, amortization of the discount, and related cash interest. (d) Record the entry to pay the interest on January 1, 2015