On September 1, 2021, Praise Corporation issued $600,000 of 10-year, 3% bonds at 96. Interest is payable

Question:

On September 1, 2021, Praise Corporation issued $600,000 of 10-year, 3% bonds at 96. Interest is payable semi-annually on September 1 and March 1. Praise’s fiscal year end is February 28.

Instructions

a. Is the market rate of interest higher or lower than 3%? Explain.

b. Record the issue of the bonds on September 1, 2021.

c. Record the accrual of interest on February 28, 2022, assuming the semi-annual amortization amount for this interest period is $1,014.

d. Record the payment of interest on March 1, 2022.

Corporation
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may...

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