$2.$ On January $1,2024$ XYZ Company issued $10-$year bonds with a face value of $$600,000$ and a stated interest rate of $5\%$ payable annually on December $31.$ The prevailing rate of interest for this type of bond at the date of issuance was $6\%.$

a$.$ Calculate the Issue price of the bonds.

Interest payments $=$ Face value $*$ Interest Rate.

$=600000*0\mathrm{.}05$

$=30000.$

Semi$-$annual payment $=$ Interest payment $/2$

$=30000/2$

$=15000.$

Present value of interest discounted at $6\%=15000*13\mathrm{.}59033$

$=$ $$203854\mathrm{.}95$

Present value of principal $=600000*0\mathrm{.}45639$

$=273834$

$$ Issue price of bond $=203854\mathrm{.}95+273834$

$=477668\mathrm{.}95$

b$.$ Record the journal entry on XYZ$$s books on Issue Date for these bonds.

Date Accounts Debit Credit

$01/01/24$ Cash $$477668\mathrm{.}95$

Discount on Bonds Pay

Bonds Pay

c$.$ Record the journal entry for the payment of interest on $12/31/26$ on XYZ Company's books using the effective interest method of amortization of bond premium or discount.

Date Accounts Debit Credit

Interest Expense

Premium on Bonds Pay

Cash

d$.$ What is the total amount of Interest expense that XYZ will record over the life of the bonds.