Sky King Company sold $9 million off our-year, 8% debentures on July 1, 2007. The bonds sold

Question:

Sky King Company sold $9 million off our-year, 8% debentures on July 1, 2007. The bonds sold to yield a real rate of 7%. Interest is paid annually on June 30.

Required

A. Determine the price of the bonds.

B. Prepare an amortization schedule for the bonds.

C. Using the format presented in this chapter, record the entry to the accounting system that is necessary to recognize interest on the bonds at June 30, 2008.

D. Assume the bonds had been sold to yield a real rate of 9%. At what price would they have sold?

Debentures
Debenture DefinitionDebentures are corporate loan instruments secured against the promise by the issuer to pay interest and principal. The holder of the debenture is promised to be paid a periodic interest and principal at the term. Companies who...