PROBLEM #1 FACTS: Number of bonds 1,000 Effective interest rate 5%

Par value of each bond $ 1,000 Interest Paid Per Year 2

Stated interest rate 4% Payment dates January 1st Issue date 1/1/20X2 July 1st

Due date 12/31/20X6 Years to maturity 5

Call % 101%

Called on 1/1/X6

Additional Facts:

Bonds called on 1/1/20X6 After this payment is made

Called at 101%

Years after issue 4

Unamortized Discount $ 9,637

1.) The value (not par value) of the bond at issue date is what? 2.) At each interest payment date cash is increased (just type the amount) or decreased (type in using a minus sign such as -100) by this amount 3.) Interest expense at the SECOND interest payment date is: 4.) Amortization of the discount/premium at the THIRD interest payment date is: 5.) At the date of call the reacquisition price of the bond is what? 6.)At the date of call the journal entry required to extinguish the debt early has what impact on net income? DO NOT CONSIDER THE NORMAL JOURNAL ENTRY TO BOOK THE INTEREST AND AMORTIZATION OF THE DISCOUNT/PREMIUM. ONLY CONSIDER THE GAIN OR LOSS ENTRY. Input the numeric amount. It if increases net income just input the amount. If it decrease net income use a minus sign such as -100. If there is no impact on net income input the number zero. 7.) At the date of call the carrying value of the bond is what amount?