Question

Brian Wood Production Company is issuing $250,000 of ten-year, $1,000-face value bonds. The bonds carry a 9.5 percent interest rate, paid annually.
Required:
(a) How much total cash interest will investors receive each year?
(b) Prepare the journal entry to issue the bonds if they are sold at
(1) 100.
(2) 97.
(3) 102.
(c) For items (1), (2), and (3) in part (b), indicate whether the bonds were sold at a premium, discount, or face value and what that means about the relationship between the stated rate of interest and the market rate of interest.
(d) For items (1), (2), and (3) in part (b), how much will the investors receive at maturity?


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  • CreatedMarch 27, 2015
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