June 1, 2004 Janson Co sold $1,000,000 in long term bonds for $877,600 maturing in 10 years with a stated interest rate of 8% and yield rate of 10%. The bonds pay interest annually on May 31 of each year. The bonds are to be accounted for under the effective interest method.

a) Construct a bond amortization table for this problem to indicate the amount of interest expense and discount amortization at each May 31. Include only the first four years. Make sure all columns and rows are properly labeled. Round to the nearest dollar.

b) The sales price of $877,600 was determined from present value tables. Explain how one would determine the price using present value tables.

c) Assuming that interest and discount amortization are recorded each May 31, prepare the adjusting entry to be made on December 31, 2006.