On January 1, the company issued 15-year bonds with a face value of $100,000. The bonds carry

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On January 1, the company issued 15-year bonds with a face value of $100,000. The bonds carry a coupon rate of 8%, and interest is paid semiannually. On the issue date, the market interest rate for bonds issued by companies with similar riskiness was 10% compounded semiannually. The issuance price of the bonds was $84,628. Make the journal entries needed on the books of the issuer to record the first two interest payments on June 30 and December 31. Use straight-line amortization of the bond discount.

Coupon
A coupon or coupon payment is the annual interest rate paid on a bond, expressed as a percentage of the face value and paid from issue date until maturity. Coupons are usually referred to in terms of the coupon rate (the sum of coupons paid in a...
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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Intermediate Accounting

ISBN: 978-0324312140

16th Edition

Authors: James D. Stice, Earl K. Stice, Fred Skousen

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