Question $10(12$ points$)$

On January $1,2025,$ Lock Industries Ltd$.$ issued $1,800,000$ face value, $5\%,10-$year bo $1,547,064.$ This price resulted in an effective$-$interest rate of $7\%$ on the bonds. Lock $y$ effective interest method to amortize bond premium or discount. The bonds pay annual January $1.$

Instructions

a$.$ Prepare an amortization table through December $31,2027(3$ interest periods$),$ for this issue. Round all computations to the nearest pound.

b$.$ Prepare the journal entry to record the accrual of interest and the amortization of the premium on December $31,2025.$

c$.$ Prepare the journal entry to record the payment of interest on January $1,2026.$

d$.$ On January $1,2026,$ after paying interest, Lock called all the bonds. The call price the redemption of the bonds.