BOND PRICING:
1. The University of Southern California sells two year bonds with a $800,000 face value to private investors. The bonds are due in two years, have a 6% coupon rate, and interest is paid annually. The bonds were sold to yield 8%. What proceeds does USC receive from the investors?
2. Did the bond sell for par, a premium or a discount? How much was the premium or discount?
3. If the bond sold for a premium or discount, what is the balance in the premium or discount following the interest payment at the end of year 1?
4. Prepare all of the necessary journal entries, beginning with the issuance of the bond, the annual interest payments and the bond retirement.