On January 1, 2012 Lance Co. issued five-year bonds with a face value of $500,000 and a stated interest rate of 12% payable semiannually on July 1 and January 1. The bonds were sold to yield 10%. Present value table factors are:

Present value of 1 for 5 periods at 10% .62092

Present value of 1 for 5 periods at 12% .56743

Present value of 1 for 10 periods at 5% .61391

Present value of 1 for 10 periods at 6% .55839

Present value of an ordinary annuity of 1 for 5 periods at 10% 3.79079

Present value of an ordinary annuity of 1 for 5 periods at 12% 3.60478

Present value of an ordinary annuity of 1 for 10 periods at 5% 7.72173

Present value of an ordinary annuity of 1 for 10 periods at 6% 7.36009

Required: Calculate the issue price of the bonds (6 points). Next, show how the company would recognize the bonds upon issuance (3 points). Prepare amortization schedule for the bonds (10 points).