Vancouver Corporation issued $20,000,000 of ve-year, 8 percent bonds on May 1, 2009. Interest payment dates are

Vancouver Corporation issued $20,000,000 of five-year, 8 percent bonds on May 1, 2009. Interest payment dates are May 1 and November 1 of each year. Vancouver uses straight-line amortization for any bond premium or discount and has a December 31 fiscal year-end.

Required:

(a) Determine the total proceeds Vancouver received from the sale of these bonds, assuming that the market interest rate for similar bonds on May 1, 2009, was

(1) 7%.

(2) 11%.

(b) Prepare the appropriate journal entries on the following dates: May 1, 2009; November 1, 2009; December 31, 2009; and May 1, 2010 assuming

(1) A 7% market rate upon issuance

(2) An 11% market rate upon issuance

(c) For each assumption listed in part (a), determine the carrying value of the bonds as of December 31, 2009.