Batra Company sold \($1,500,000\) of five-year, 12% bonds on 1 August 20X2. Additional information on the bond issue is as follows:

Required:
1. Record the bond issuance on 1 August 20X2.
2. Prepare the adjusting journal entry on 31 December 20X2.
3. Give the entry to record the interest payment on 31 January 20X3.
4. On 31 July 20X5, after interest is paid, Batra purchases and retires 40% of the bond issue at 98. Record the bond retirement.
5. What item(s) will appear on the statement of cash flow with respect to the retirement? Indicate the amount and the section.
6. How will the remaining bond appear on the statement of financial position directly after the retirement?
7. Assume that bonds of similar risk and maturity are yielding 14%. What fair value disclosure will the company make?
8. If the market interest rate for low-risk investments was 8% on 31 July immediately after the retirement in requirement 5, how much money would have to be invested in securities to defease the remaining bond?

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Bond date Maturity date Yield rate Interest payment dates Bond discount/premium amortization Proceeds on issuance 1 February 20X2 31 January 20X7 10% 31 July and 31 January Effective-interest method $1,606,617