Question

Journalize issuance of the bond and the first semiannual interest payment under each of the following three assumptions. The company amortizes bond premium and discount by the effective-interest amortization method. Explanations are not required.
Requirement
1. Ten-year bonds payable with face value of $86,000 and stated interest rate of 14%, paid semiannually. The market rate of interest is 14% at issuance. The present value of the bonds at issuance is $86,000.
2. Same bonds payable as in assumption 1, but the market interest rate is 16%. The present value of the bonds at issuance is $77,594.
3. Same bonds payable as in assumption 1, but the market interest rate is 8%. The present value of the bonds at issuance is $121,028.


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  • CreatedJune 15, 2015
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