The notes to the financial statements of Aggarwal Corporation for 2013 reveal the following information with respect to long-term debt. All interest rates in this problem assume semiannual compounding and the effective interest method of amortization using amortized cost measurement based on the historical market interest rate.

a. Compute the carrying value of the zero coupon notes on December 31, 2013. A zero coupon note requires no periodic cash payments; only the face value is payable at maturity. Do not overlook the italicized sentence above.

b. Compute the amount of interest expense for 2013 on the 7% bonds.

c. On July 1, 2013, Aggarwal Corporation acquires half of the 9% bonds ($500,000 face value) in the market for $526,720 and retires them. Give the journal entry to record this retirement.

d. Compute the amount of interest expense on the 9% bonds for the second half of 2013.

December 31 2013 2012 $800,000 zero coupon notes due December 31, 2022, initially priced to yield 10% ... $ 301,512 ? $1,000,000 7% bonds due December 31, 2017. Interest is payable on June 30 and December 31. The bonds initial price implies a yield of 8%. $066,336 $1,000,000, 9% bonds due December 31, 2028. Interest is payable on June 30 and December 31. The bonds initial price implies a yield of 6%.. ? $1,305,832