On January 1, 2024, NFB Visual Aids issued $800,000 of its 20-year, 8% bonds.

• The bonds were priced to yield 10%.
• Interest is payable semiannually on June 30 and December 31.
• NFB Visual Aids records interest expense at the effective rate and elected the option to report these bonds at their fair value.
• On December 31, 2024, the fair value of the bonds was $668,000 as determined by their market value in the over-the-counter market.
• General (risk-free) interest rates did not change during 2024.

Required:

1-a. Determine the price of the bonds at January 1, 2024.

1-b to 4. Prepare the necessary journal entries:

1b) Record the issuance of bonds

2b) Record the first interest payment

3b) Record the second interest payment

4b) Record the entry to adjust the bonds to their fair value for presentation in the December 31, 2024 balance sheet