3. KLM ltd. has decided to issue $500,000 of 10 years 6% bonds on the September 30th 2020. Interest is paid annually and the bonds have a callable price of

3. KLM ltd. has decided to issue $500,000 of 10 years 6% bonds on the September 30th 2020. Interest is paid annually and the bonds have a callable price of 99 effective October 01st 2022. The market yield rate is 7%. Use the Effective Interest method.
Requirements:
a) Calculate the price of the bond.
b) Journalise the issuance of the bond on September 30th 2020.
c) Journalise the interest expense for December 31st 2020 and September 30th 2021.
d) Journalise the calling of the bond on October 01st 2022.

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