On June 1, 2020, Arctic Gold Corporation (Arctic) purchased a machine that is used to grind and crush rock. The machine that cost US$4,000,000 was purchased from Chicago Steelworks Inc. (the supplier) situated in Illinois. Duty and shipping amounted to Cdn$125,000, annual insurance on the machine is Cdn $125,999 while the electrical installation was Cdn$75,000. The exchange rate at the time of purchase was US$1=Cdn$1.25. The supplier believed the machine would be useful for 5 years. The supplier has agreed to repurchase the machine for Cdn$300,000 at the end of the machines useful life. Arctics year-end is December 31st.

Management is considering financing the acquisition of the asset by issuing a 5-year, Cdn$6,000,000 bond with a coupon rate of 8%. Interest is paid semi-annually - June 30 and December 31. The current market rate on comparable bonds is 10%.

(i) Calculate the proceeds the Company will receive if it goes forward with the bond issue on July 1, 2020. Prepare the journal entry to record the bond.

(ii) Prepare the journal entries to record the first two interest payments assuming the company has adopted the effective-interest rate method of amortizing discounts or premiums.