On January 1, 2021,BuffaloLtd. issued bonds with a maturity value of $5.40million for $5,175,360, when the market rate of interest was7%. The bonds have a contractual interest rate of6% and mature on January 1, 2026. Interest on the bonds is payable semi-annually on July 1 and January 1 of each year. On January 1, 2021,SunlandCompany, a public company, purchasedBuffaloLtd. bonds with a maturity value of $1.08million to earn interest. On December 31, 2021, the bonds were trading at97. Both companies' year end is December 31.

a. What amount didSunlandCompany pay forBuffaloLtd.'s bonds?

b. Prepare the journal entry forSunlandCompany (investor) on January 1, 2021.

c. bond amortization schedule forSunlandCompany for the first four interest periods.

Bond Discount Amortization Table

Effective Interest Method-Semi-annual Interest Payments

6% Bonds Issued at market rate of7%

Date

(A)Interest Received (B)Interest Revenue (C)Discount Amortization (D)Bond Amortized Cost

Jan. 1, 2021

$July 1, 2021

$$$Jan. 1, 2022

July 1, 2022

Jan. 1, 2023