On May 1, 2020, Medum Corporation issued a 4-year bond worth $401,000 with an interest rate of 8% per annum. Interest is to be paid semi-annually on October 31 and April 30. At the time of the issuance, the market interest rate was 6%. Medum Corporation amortizes any premium or discount using the effective interest method.

a) Calculate the bond issue price and the resulting premium or discount.

Bond Issue Price: $ ___________

Premium or Discount: $____________

b) Prepare journal entries to record the following bonds payable transactions. 1) Issuance of bonds on May 1, 2020.

2) Payment of interest and amortization of premium or discount on October 31, 2020.

3) Accrual of interest and amortization of premium or discount on December 31, 2020, which is the company's year-end.

4) Payment of interest and amortization of premium or discount on April 30, 2021.

5) Redemption of the bond for its face value one year before maturity on May 1.

	pv factor
face value	0.7894
cash interest	7.0197