On

JanuaryJanuary

1,

20162016,

HostaHosta,

Inc. issued

$ 4 comma 400 comma 000$4,400,000

par value

12 %12%,

fivefive-year

bonds. Interest is payable semiannually on January 1 and July 1 with the first interest payment on July 1,

20162016.

The market rate of interest on the date of the bond issue was

16 %16%.

HostaHosta

retired the debt early at the end of the third year for 4100000.

a.

Determine the carrying value of the bond at retirement.

b.

Prepare the journal entry to record the early retirement of the debt at the end of the third year.

2. On

JanuaryJanuary

1,

20162016,

MandersonManderson

Technology, Incorporated issued

$ 830 comma 000$830,000

of

$ 1 comma 000$1,000

par value,

5 %5%,

sixsix-year

bonds. Interest is payable semiannually each

JanuaryJanuary

1 and

JulyJuly

1 with the first interest payment due at the end of the period on

JulyJuly

1,

20162016.

The market rate of interest for similar non-convertible bonds on the date of the bond issue was

12 %12%.

However, because these bonds are convertible, the effective rate is

10 %10%.

Each bond is convertible into

8080

shares of

MandersonManderson

Technology's

$ 2$2

par value common stock.

a.	Determine the issue price of the debt.
b.	Prepare the amortization table for the bond issue through JanuaryJanuary 1, 20192019, assuming that MandersonManderson Technology uses the effective interest rate method of amortization.
c.	Prepare the journal entry when MandersonManderson Technology issued the bonds.
d.	Prepare the journal entry to record the first interest payment.
e.	The bonds converted on January 1, 20192019. Prepare the journal entry to record the bond conversion.

$ 4 comma 100 comma 000