Accounting for long-term bonds. The notes to the financial statements of Aggarwal Corporation for 2008 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 cast measurement based on the historical market interest rate.

a. Compute the carrying value of the zero coupon notes on December 31, 2008. A zero coupon note requires no periodic cash payments; only the face value is payable at maturity. Do not ovetlook the italicized sentence above.
b. Compute the amount of interest expense for 2008 on the 7% bonds.
c. On July 1, 2008, 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 of2008.

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December 31 2008 2007 $800,000 zero coupon notes due December 31, 2017, initially priced to yield 10% . $1,000,000 7% bonds due December 31, 2012. Interest is payable on June 30 and December 31. The bonds initial price implies a yield of 8%.. $1,000,000, 9% bonds due December 31, 2023. Interest is payable on June 30 and December 31. $ 301,512 $966,336 The bonds' initial price implies a yield of 6% .. $1,305,832