1. On July 1, 2011, Jackson Company exercises a $5,000 call option (plus par value) on its outstanding bonds that have a carrying value of $208,000 and par value of $200,000. The company exercises the call option after the semiannual interest is paid on June 30, 2011. Record the entry to retire the bonds.
2. On January 1, 2011, the $1,000,000 par value bonds of Gruden Company with a carrying value of $1,000,000 are converted to 500,000 shares of $0.50 par value common stock. Record the entry for the conversion of the bonds.
3. Valdez Company borrows $170,000 cash from a bank and in return signs an installment note for five annual payments of equal amount, with the first payment due one year after the note is signed. Use Table B.3 in Appendix B to compute the amount of the annual payment for each of the following annual market rates: (a) 4%, (b) 8%, and (c) 12%.