On July 1, 2012, Paramount, Inc., issued $500,000, 8%, 30-year bonds with interest paid semiannually on January 1 and July 1. The bonds were sold when the market rate of interest was 8%. On October 1, 2015, the bonds were retired when their fair market value was $495,000.

Required:

1. Demonstrate, using the present value tables (see Appendix B), that the bonds were sold for $500,000.

2. Provide the journal entry made on July 1 to record the issuance of the bonds.

3. Provide the journal entry made on December 31, 2012, relating to interest.

4. Provide the journal entries to record the retirement of the bonds.