Several years ago, Huergo Dooley Corporation (HDC) issued $2,000,000-face value, 8-percent semiannual coupon bonds on the market priced to yield 10 Percent, compounded semiannually. The bonds require HDC to make semiannual payments of 4 percent of face value, on June 30 and December 31 of each year. The bonds mature on December 31, Year 5.

a) Compute the book value of these bonds on January 1, Year 1.

b) Give HDCs journal entry to recognize interest expense and cash payments on June 30, Year 1.

c) Give HDCs journal entry to recognize interest expense and cash payments on December 31, Year 1.

d) On January 1, Year 2, these bonds traded in the market at a price to yield 6 percent, compounded semiannually. On this date, HDC repurchased 20 percent of these bonds on the open market and retired them. Give its journal entry to Record the repurchase.