On January 1, Rare Bird ltd. purchased 12% bonds dated January 1, with a face amount of $20 million. The bonds mature in 2022 (10 years). For bonds similar risk and maturity, the market yield is 10%.

On January 1, Rare Bird ltd. purchased 12% bonds dated January 1, with a face amount of $20 million. The bonds mature in 2022 (10 years). For bonds similar risk and maturity, the market yield is 10%. Interest is paid semiannually on June 30 and December 31.

Required.

1)determine the price of the bonds at January 1

2)prepare the journal entry to record the bond purchase by Rare Bird on January 1

3)prepare the journal entry to record interest on June 30, using the effective interest method.

4)prepare the journal entry to record interest on December 31, using the effective interest method.

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