On 1 January 2021, Anson C Ltd issued bonds with annual coupon rate of 11%. The bonds pay interest quarterly on 31 March, 30 June, 30 September and 31 December. The face value of the bonds is $1,000,000. The bonds will mature in 30 years. The annual market interest rate is 10%.

Required:

1. Prepare journal entries to record the issuance of the bonds on 1 January 2021.

2. Prepare an effective interest amortization table for the bonds for the first year (1 January 2021 – 31 December 2021). You can use Excel to do it. Make sure that the format is readable.

3. Prepare journal entries to record the first two interest payments.

4. After 5 years (1 January 2026), Anson, the CEO of the Company, decides to purchase the bonds back from the public (repurchase the bonds from the public). Edan, CFO of the Company, suggests that Anson should buy it back at the price of $1,000,000. Assume that all other information remains unchanged. Do you agree? Explain your answer. All other information remains constant.