On February 1, 20x1, Broncos Company issued 9.75% bonds with a face amount of $20 million. The bonds mature in 5 years. For bonds of similar risk and maturity, the market yield is 11.5%. Interest is paid semiannually on July 31 and January 31. Broncos is a calendar-year corporation.

1) Determine the price of the bonds on February 1, 20x1 using the Excel.

2) Prepare the journal entry to record the bond issuance on February 1, 20x1.

3) Prepare an amortization table for 5 years using the effective interest method.

4) Prepare the journal entries (using the effective interest method) on July 31, 20x1 (1st payment).

5) Prepare the journal entry (using the effective interest method) on December 31, 20x1 (adjusting entry, no cash payment!)

6) What would be the journal entry if all bonds are retired at 102.5 on August 1, 20x2 right after the third payment. Prepare the journal entry for the bond retirement.