On September $1,2024,$ Basil Company issued $$9,000,000,8\%,10-$year bonds. The bonds were issued to yield $10\%.$ The bonds pay interest annually on August $31$ of each year. The bonds are to be accounted for under the effective$-$interest method.

Instructions

Required

$($a$)$ Prepare a detailed calculation of the present value of the bond using present value factors located in the tables in chapter $5.$ You must include the present value factors in your solution or you will receive $50\%$ credit. Round calculation to the nearest dollar.

$($b$)$ Construct a bond amortization table. Include only the first four years. Make sure all columns and rows are properly labeled. Round to the nearest dollar.

$($c$)$ Assuming that interest and discount$/$premium amortization are recorded each August $31,$ prepare the adjusting entry to be made on December $31,2026.$ Round to the nearest dollar.