Ficus Tree Farm issued five $1,000 bonds with a stated annual interest rate of 12 percent on January 1, 2018. The bonds mature on January 1, 2023. Interest is paid semiannually on June 30 and December 31. The bonds were sold at a price that resulted in an effective interest rate of 14 percent. The bonds can be called for 103.5 beginning June 30, 2020.

REQUIRED:
a. Prepare the entry on January 1, 2018, to record the issuance of these bonds.
b. Prepare the entry on June 30, 2018, to record the interest payment.
c. Assume that Ficus wishes to retire the bonds on June 30, 2020. If the bonds are selling on the open market on that date at a price that would result in a return of 10 percent, should Ficus exercise the call provision or simply attempt to buy the bonds at the market price?
d. Is it likely that Ficus would be able to buy back all outstanding bonds on the bond market at market price?
e. Prepare the entries necessary on June 30, 2020, if Ficus chooses to exercise the call provision.