On July 1, 2008, Justin Corporation issued $20 million of 8%, twenty-year bonds. Interest on the bonds is paid semiannually on December 31 and June 30 of each year, and the bonds were issued when the market interest rate was 9%.

Required:

1. Compute the issue price of the bonds on July 1, 2008.

2. Prepare the journal entries to record all interest expense and all cash interest payments for 2011.

3. On January 1, 2013, the company exercised a call provision in the debenture agreement and redeemed 60% of the bonds at 104% of par. Prepare the journal entry the company made to record this partial redemption.

4. The market yield for the bonds on January 1, 2013, was 6%. What is the economic gain or loss that Justin realized on the repurchase of its debt?

5. Prepare the journal entry (entries) that Justin would make during 2028 with respect to the bonds.