Toronto Outlets issued $1,200,000, 4% convertible bonds on Jan. 1, 2012 for $1,150,000. Interest would be paid semi-annually on July 1 and Jan. 1. These bonds would mature on Jan 1, 2020, and be convertible at the investors' option after Jan. 1, 2015 into common shares of the company at the rate of 50 shares for each $1,000 in face (par) value.

The yield (market rate) on non-convertible bonds issued by companies with credit ratings similar to that of Toronto Outlets was 6% in early 2012. Required 1. Prepare the journal entry to record the issuance of bonds on Jan. 1, 2012

2. Prepare the bond amortization table for the first four interest payments only.

3. The convertible bonds were repurchased at 96 and retired on Jan. 1, 2014 after the interest due on that day was paid. The repurchase price would have been 95 if the bonds had been nonconvertible. Prepare the journal entries for the bond retirement.