The notes to the Wolfe Ltd$.$ financial statements reported the following data on December $31,$ Year $1($end of the fiscal year$)$:

$($Click the icon to view the financial statement data.$)$

Wolfe amortizes bond discounts using the effective$-$interest method and pays all interest amounts at December $31.$

Read the requirements.

Data table

Requirements

Note $6.$ Indebtedness

Bonds payable, $2\%$ due on December $31,$ Year $8,$$$5,300,000$

Less: Discount $q,$

Notes payable, $7\%,$ payable in $$60,000$ annual

installments starting in Year $5$

$$,360,000$

Assume the market interest rate is $5\%$ on January $1$ of year $1,$ the date the bonds are issued.

a$.$ Using the PV function in Excel, what is the issue price of the bonds?

b$.$ What is the maturity value of the bonds?

c$.$ What is Wolfe's annual cash interest payment on the bonds?

d$.$ What is the carrying amount of the bonds at December $31,$ year $1?$

Prepare an amortization table through December $31,$ Year $4$ for the bonds. $($Round all amounts to the nearest dollar.$)$ How much is Wolfe's interest expense on the bonds for the year ended December $31,$ Year $4?$

Show how Wolfe would report these bonds and notes at December $31,$ Year $4.$