PROBLEM 1: Bama Company sold $850,000 par value 12-year bonds on January 1, 2020. The bonds pay interest semiannually (assume payment dates are June 30 and December 31 each year) and have a stated rate of 5.5%. The bonds were issued on January 1^st to bond investors at a price to yield 4.6%.

Immediately after making the December 31, 2026, payment, Bama retires 40% (i.e. the company retires $340,000 face value of the bonds) by purchasing them on the market. Bama pays $325,000 to retire the bonds. Complete the financial statement template in the answer sheet for this transaction. Make sure to indicate the direction of changes and the relevant amounts. (There two lines provided in the template one for direction and one for amount.) Show any additional calculations in the space below the template.