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Please read each problem very carefully. When you answer the questions, please explain your answers and show related calculations as much as possible. I might

Please read each problem very carefully. When you answer the questions, please explain your answers and show related calculations as much as possible. I might give partial credits based on your explanations.

Problem 1. Entries for Bond Transactions-Effective Interest Method (14 points).

On January 1, 2020, Piper Co. issued ten-year bonds with a par value of $5,000,000 and a stated interest rate of 10%, payable semiannually on July 1 and January 1. The effective interest rate is 12%. The issue price is $4,427,500.

Important Hint: In this case, bonds were issued at DISCOUNT because the issuance price is lower than the par value.

Instructions

Prepare the journal entries to record the following events. (Round to the nearest dollar.) Please show your calculations.

(a)The issuance of the bonds on Jan 1, 2020.

(b)The payment of interest and related amortization on July 1, 2020.

(c)The accrual of interest and the related amortization on December 31, 2020.

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