Yamada Inc. issued $1,000,000 of 5-year, 5% bonds payable on January 1, 2014, when the market rate

Question:

Yamada Inc. issued $1,000,000 of 5-year, 5% bonds payable on January 1, 2014, when the market rate was 6%. Yamada Inc. pays interest each June 30 and December 31 and amortizes any discount or premium by the effective interest method. On July 1, 2017, Yamada retired 60% of its bonds at 99.5 in the open market.
Requirements
1. Calculate the cash receipt for the bond issuance.
2. Calculate the bond carrying value on July 1, 2017.
3. Calculate the gain or loss on bond retirement.
4. Journalize Yamada’s issuance of the bonds on January 1, 2014 and bond retirement on July 1, 2017.