QUESTION $6(20$ marks$)$

A$]-(13$ marks$)$

In the following cases the company closes its books on December $31.$

Sanford Co$.$ sells $$500,000$ of $10\%$ bonds on January $1,2012.$ The bonds pay interest on June $31$ and December

C$..51.$ The due date of the bonds is December $31,2015.$ The bonds yield $12\%.$

Required

a$)$ Using the future and present value tables $($given at the end of the paper$),$ calculate the proceeds from the sale of the bonds, along with the bond discount or premium.

$(7$ marks$)$

b$)$ Using the effective$-$interest method, prepare the amortization table for the bond.

$(4$ marks$)$

c$)$ Prepare journal entries for:

a$.$ January $1,2012-$ to record the issuance of the bond;

b$.$ June $30,2012-$ to record the first interest payment on the bond.

$(2$ marks$)$