Part B (20 points each for a possible total of 40 points)

1.Simon Brothers pays $47,000 into a bond sinking fund each year to redeem the future maturity of its bonds. During the first year, the fund earned $3,825. At the time of bond redemption, the fund has a balance of $417,000. Of this, $400,000 was used to redeem the bonds. Journalize the following entries.

a.Initial deposit

b.The first year's interest

c.The redemption of the bonds

2.On January 1, Auctions Online issued $300,000, 9%, 10-year bonds to lenders at the contract rate. Interest is to be paid semiannually on July 1 and January 1. Journalize the following entries.

a.Issued the bonds

b.Paid first semiannual interest payment

c.Retired the bonds at maturity