Ficus Tree Farm issued five $1,000 bonds with a stated annual interest rate of 12 percent on January 1, 2021. The bonds mature on January 1, 2026. 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, 2023.

INSTRUCTIONS:

1. Prepare the entry on January 1, 2021, to record the issuance of these bonds.
2. Prepare the entry on June 30, 2021, to record the interest payment.
3. Assume that Ficus wishes to retire the bonds on June 30, 2023. 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?
4. Is it likely that Ficus would be able to buy back all outstanding bonds on the bond market at market price?
5. Prepare the entries necessary on June 30, 2023, if Ficus chooses to exercise the call provision.

Required:

After completing Problem 11.11 provide the following answers in whole numbers with commas and with no decimal places or dollar signs. Negative amounts or Losses should be listed in parenthesis.

From Part a, the entry on January 1, 2021, to record the issuance of these bonds would include a Debit to Cash of what amount (Round your answer to 2 decimals)?

From Part b, the entry on June 30, 2021, to record the interest payment would include a CREDIT to Discount on Bonds Payable of what amount (Round your answer to 2 decimals)?

From Part c, assume that Ficus wishes to retire the bonds on June 30, 2023. What amount would Ficus have to pay for the bonds on the open market on that date which would result in a return of 10 percent? (Round your answer to the nearest dollar. Example: 5,180.40 as 5,180)

From Part c, assume that Ficus wishes to exercise the call provision on the Bonds. What amount would Ficus have to pay for the bonds if it exercises the call provision? (Enter your answer in whole dollars)