Question: Johnson Galleries issued 500 000 of 10 year bonds on January 1

Johnson Galleries issued $500,000 of 10-year bonds on January 1, 2012. The bonds pay 8% interest semiannually on July 1 and January 1. The market rate of interest on the date of issuance was 8%.
a. Prepare all journal entries necessary in 2012.
b. How would the issue price change if the market rate was lower than 8%? Higher than 8%?
c. What cash flows associated with the bond will be reported in the financing section of the 2012 statement of cash flows?

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  • CreatedJuly 16, 2015
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