1: Bonds - Effective Interest Method (18 marks) On May 1, 2021, Pacific Airlines Ltd., a company following IFRS, sold 10-year bonds. The bonds were dated May 1, 2021. Interest is paid semi-annually on May 1 and November 1 each year. On March 1, 2023, Pacific purchased some of the bonds on the open market for their fair value plus accrued interest and retired them. Pacific uses the effective interest method for amortization of bond premiums and discounts. Other information pertaining to the issuance of the bonds follows: Par-value of the bonds sold Stated rate of interest for the bonds issued Effective rate of interest for the bonds issued Percentage of bonds retired on March 1, 2023 Price at which bonds were repurchased on March 1, 2023 $ 11,273,000 7% 8% 31% 97 Assume that Pacific has a December 31 year end, and that the company pays any interest accrued at the time the debt is retired. Required: 1. Prepare an amortization schedule for the first 3 years of the bond issue. (5 marks) 2. Prepare the journal entry for the issuance of the bond on May 1, 2021. (1 mark) 3. Prepare all journal entries after the issuance of the bond until December 31, 2021. (4 marks) 4. Calculate the gain or loss on the partial retirement of the bonds on March 1, 2023. (3 marks) 5. Prepare the journal entries to record the partial retirement of the bonds on March 1, 2023