i. Q5. (10 marks) a) Suppose Mike corporation buys $1,000,000 of TD bonds at a price of 101. The TD bonds pay cash interest at the annual rate of 7% and mature at the end of five years.) How much did Mike corporation pay to purchase the bond investment? How much will Mike corporation collect when the bond investment matures? ii. How much cash interest will Mike Corporation receive each year from TD? iii. Will Mike Corporation annual interest revenue on the bond investment be more or less than the amount of cash interest received each year? Give your reason. b) Suppose BMO issued a six-year $10,000 bond with stated interest rate of 6.25% when the market interest rate was 6.25%. Assume that the accounting year of MBO ends on October 31. Journalize the following transactions, including an explanation for each entry. (10 marks) i. Issuance of the bond, payable on May 1, 2014 ii. Accrual of interest expense on October 31, 2014 (rounded to the nearest dollar) Payment of cash interest on November 1, 2014 iv. Payment of the bonds at maturity (give the date) Oct, 31st Particulars Debit Credit D ii) e 1 of 14 1.37