Problem:
National Orthopedics Co. issued 9% bonds, dated January 1, with a face amount of $650,000 on January 1, 2013. The bonds mature on December 31, 2016 (4 years). For bonds of similar risk and maturity the market yield was 10%. Interest is paid semiannually on June 30 and December 31. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.)
Required:
Question 1: Determine the price of the bonds at January 1, 2013.
Question 2: Prepare the journal entry to record their issuance by National on January 1, 2013.
Question 3: Prepare an amortization schedule that determines interest at the effective rate each period.
Question 4: Prepare the journal entry to record interest on June 30, 2013.
Question 5: Prepare the appropriate journal entries at maturity on December 31, 2016.
Note: Please provide through step by step calculations.