Part 1:

Nova Ltd. went public 2 years ago. Nova Ltd. issued $500,000, 8%, 6-year bonds on January 1

2022, when the market interest rate was 6%. Interest is payable semi-annually on July 1 and

January 1. The company has a December 31 year end.

Required:

1. Calculate the issue price (round to nearest dollar) on January 1, 2022.

2. Based on the calculation above, the bond is issued at a

(Explain)

3. Record all the journal entries for 2022.

Part 2:

Assume that on July 1, 2028, Nova Ltd. redeemed 30% of the bonds at 112.5 and all the relevant

journal entries ate recorded up to July 1, 2028 prior to the early redemption.

Required:

4. Record the journal entry on July 1, 2028 regarding the early redemption.

5. Record the journal entry on January 1, 2029. (4 Marks)

Part 3:

6. Assume Nova Ltd. is a privately owned company, discuss another alternative to account for

the interest and prepare the July 1, 2022 iournal entry to illustrate how this method works.

SHOW ALL WORK ! NEED ASAP