Noelle Inc. issued a $1.2 million bond at 9% for 2 years to finance a project. The bonds were issued on January 1, 2018. The bond pays interest semi-annually on July 1 and January 1. The market rate is 8%. The company used an effective interest method. Year-end is September 30.

Required:

1. Calculate the proceeds (price) that Noelle Inc. would receive for the bond on January 1, 2018. The PV tables can be used. The calculator and the Excel approach are also acceptable methods. Show calculations.
2. Prepare a bond amortization schedule using the effective interest method.
3. Prepare the journal entries to record the initial sale of the bond on January 1, 2018, the interest payment on July 1, 2018, the accrual on September 30, 2018, and the interest payment on January 1, 2019.
4. Assume that on May 1, 2019, Noelle Inc. decides to retire 25% of the bonds for a cash price of 103 plus accrued interest.
5. 1. Prepare the journal entry to pay out the interest to the bondholders on May 1, 2019, due to the bond retirement.
6. 2. Prepare the journal entry for the bond retirement on May 1, 2019.

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