Journalize issuance of the bond and the first semiannual interest payment under each of the following three
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.
1. Seven-year bonds payable with face value of $83,000 and stated interest rate of 10%, paid semiannually. The market rate of interest is 10% at issuance. The present value of the bonds at issuance is $83,000.
2. Same bonds payable as in assumption 1, but the market interest rate is 16%. The present value of the bonds at issuance is $62,433.
3. Same bonds payable as in assumption 1, but the market interest rate is 8%. The present value of the bonds at issuance is $91,727.
Face Value Face value is a financial term used to describe the nominal or dollar value of a security, as stated by its issuer. For stocks, the face value is the original cost of the stock, as listed on the certificate. For bonds, it is the amount paid to the...
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Requirement 1 Date Accounts and Explanation Debit Credit Cash 83000 Bonds Payable ...View the full answer
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