1)Capps Co produces and sells bottle capping equipment for soft drink and spring water bottlers. To finance its operations, Capps Co. issued $20,000,000 of five-year, 9% bonds with interest payable semiannually at an effective interest rate of 10%. Determine the present value of the bonds payable.

2) On the first day of its fiscal year, Ellis Company issued $12,000,000 of five-year, 10% bonds to finance its operations of producing and selling home improvement products. Interest is payable semiannually. The bonds were issued at an effective interst rate of 12%, resulting in Ellis Company recieving cash of $11,116,854.

a. Journalize the entries to record the following:

1) Sale of bonds.
2) First semiannual interest payment.(Amortization of discount to be recorded annually.)
3) Second semiannual interest payment.
4) Amortization of discount at the end of the year, using the straight-line method.(Round to the nearest dollar.)

b. Determine the amount of the bond interest expense for the first year.