Question number 1.

On march 1 2002 Pyne furniture co. issued 700,000.00 of the 10 percent bonds to yield 8 percent. Interest is payable semiannually on February 28 and August 31. The bonds mature in 10 years. Pyne Furniture Co is a calendar year corporation.

A. What is the issue price of the bonds. How did you compute it?

B. What is the amortization table through the first two interest periods using effective interest method?

C. What are the journal entries to record bond related trabsaction on:

a.March 1 2002

b.August 31, 2002

c.December 31 2002

d.February 28 2003(assume no reversing entries are made).

Question number 3. On june 1, 2002 Jefferson Control Inc. issued 12,000,000.00 of the 10 percent bonds to yield 12 percent. Interest is payable semiannually on May 31 and November 30. The bonds mature in 15 years. Jefferson Control inc. is a calendar year corporation.

A. What is the issue price of the bonds. How did you compute it?

B. What is the amortization table through the first two interest periods using effective interest method?

C. What are the journal entries to record bond related trabsaction on:

a. June 1,2002

b. November 30,2002

c. December 31,2002

d. May 31 2003

Question number 3: On january 1,20x1 an entity issues bonds with face amount of 4,000,000.00 for 3,784,798.00. The bonds mature on December 31,20x4 and pay annual interest of 16%. The effective interest rate is 18%.

On december 31,20x2 after paying the annual interest the entity retires the bonds at a call premium of 200,000.00. The entity is subject to income tax rate of 30%.

A. what is the entry on December 31 20x2 to record the retirement of the bonds?