On January 1, 2018, Reyes Company issued 5-year, $600,000, with an 8% stated rate. The market rate for other similar instruments was 10%. The bonds pay interest semi-annually each July 1 and January 1.

Required:

1. Using the time value of money tables, determine the price of the bonds. (Note: You MUST show all calculations using Time Value of Money tables.

2. Prepare a bond amortization table, showing the semi-annual interest payments, the interest expense and the carrying value of the bond for all five years.

3. On July 1, 2021, Reyes retired the bonds at 98 (meaning 98% of face value). Determine the gain or loss on retirement of the bonds. You MUST show your calculations.

Bonus Problem 10 points Now assume that, on January 1, 2018, Reyes Company issued 5-year, $600,000, with an 10% stated rate. The market rate for other similar instruments was 8%. (This is the opposite of the problem above). The bonds pay interest semi-annually each July 1 and January 1.

Required:

1. Using the time value of money tables, determine the price of the bonds. (Note: You MUST show all calculations using Time Value of Money tables. I will not accept answers that were derived using Excel formulas or online tables.

2. Prepare a bond amortization table, showing the semi-annual interest payments, the interest expense and the carrying value of the bond for all five years.

3. On July 1, 2021, Reyes retired the bonds at 103 (meaning 103% of face value). Determine the gain or loss on retirement of the bonds. You MUST show your calculations.