Pattison Associates issued 4-year bonds with a face value of $300,000 to yield an effective rate of

Question:

Pattison Associates issued 4-year bonds with a face value of $300,000 to yield an effective rate of 6%. The bonds pay interest annually and were sold at a price of $310,394.

Required

A. What was the stated rate for these bonds?

B. Show what information would be entered into the accounting system regarding these bonds on the date of issue. Using the format presented in this chapter, record the entry necessary at issuance and at the first interest payment date, and the entry at the final interest payment date.

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...