Santa Corporation issued a bond on January 1 of this year with a face value of $1,000.

Question:

Santa issued a bond on January 1 of this year with a of $1,000. The bond's rate is 6 percent and interest is paid once a year on December 31. The bond matures in three years. The annual market rate of interest was 8 percent at the time the bond was sold. The following amortiza¬tion schedule pertains to the bond issued:

Santa Corporation issued a bond on January 1 of this

Required:
1. What was thet bond's issue price?
2. Did the bond sell at a discount or a premium? How much was the premium or discount?
3. What amount(s) should be shown on the balance sheet for bonds payable at the end of Year 1 and Year 2?
4. Show how the following amounts were computed for Year 2:
(a) $60,
(b) $77,
(c) $17, and
(d) $981.

Balance Sheet
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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...