Question

Charger Corporation issued a $ 250,000 bond that matures in five years. The bond has a stated interest rate of 8 percent and pays interest on February 1, May 1, August 1, and November 1. When the bond was issued, the market rate of interest was 12 percent. Record the issuance of the bond on February 1. Also record the payment of interest on May 1 and August 1. Use the straight- line method for amortization of any discount or premium. Explain why someone would buy a bond that did not pay the market rate of interest.


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  • CreatedAugust 04, 2015
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