Please tell me the journal entries for the following
1) On 1/1/07 Hawkeye issues $500,000 of ten (10) year, 9% coupon bonds, callable after six months at 104, interest is payable quarterly. The market rate of interest at the time of issue is 10%.
2) The company, on 12/31/07, pays the fourth interest payment on the bond and exercises its option to call the bond as interest rates have declined. Hawkeye finances the retirement of the bonds by borrowing $500,000 at 8% from the Mahaska Bank.