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Question(s) / Instruction(s):

(a)          Assume instead that the proceeds were $3,540,000. Record the journal entry to show the payment of semiannual interest and the related discount amortization on June 30, 2010, assuming that the discount of $60,000 is amortized on a straight-line basis.

Use the following transactions.

 a.           Income tax expense of $783 for the current period is accrued. Of the accrual, $268 represents deferred income taxes.

b.            Bonds payable with a face amount of $5,600 are issued at a price of 99.

c.             Of the proceeds from the bonds in part b, $4,150 is used to purchase land for future expansion.

d.            Because of warranty claims, finished goods inventory costing $134 is sent to customers to replace defective products.

e.            A three-month, 10% note payable with a face amount of $27,000 was signed. The bank made the loan on a discount basis.

f.             The next installment of a long-term serial bond requiring an annual principal repayment of $35,000 will become due within the current year.

(b)          Record the journal entries to show each transaction/adjustment. 

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