Jeff Company found out in early 2015 that one of its major competitors has put itself up for sale. Eager to raise cash to buy out the competitor, Jeff Company issued $900,000, 5% bonds 5 on May 1, 2015, to yield 4% per year. The bonds would be outstanding for 8 years from the issuance date, and pay interest semi-annually on November 1 and May 1.

1) How much was raised by Jeff from the bond issue? (use present value factors)

2) Prepare an amortization table using the effective-interest method of amortization. First 5 payments only.

3) Prepare journal entries for 2015 and 2016 for bonds payable, using the effective-interest method (Dec 31 fiscal year)

4) Assume that the bond was bought back on the open market on Nov 1, 2017 @ 103 after paying interest due on that day. Record the journal entry for the bond buy-back.