International Foods issued 10% bonds, dated January 1, with a face amount of $140 million on January 1, year 1. The bonds mature on December 31, after 15 years. The market rate of interest for similar issues was 8%. Interest is paid annually on December 31. International uses the effective interest method.

Required:

1. Determine the price of the bonds at January 1, year 1.

2. Prepare the journal entry to record their issuance by International Foods on January 1, year 1.

3. Prepare the amortization schedule for bonds duration

4. Prepare the journal entry to record interest on December 31, year 7.