The Bradford Company issued 10% bonds, dated January 1, with a face amount of $80 million on
Question:
The Bradford Company issued 10% bonds, dated January 1, with a face amount of $80 million on January 1, 2021. The bonds mature on December 31, 2030 (10 years). For bonds of similar risk and maturity, the market yield is 12%. Interest is paid semiannually on June 30 and December 31.
Required:
1. Determine the price of the bonds at January 1, 2021.
2. Prepare the journal entry to record their issuance by The Bradford Company on January 1, 2021.
3. Prepare the journal entry to record interest on June 30, 2021 (at the effective rate).
4. Prepare the journal entry to record interest on December 31, 2021 (at the effective rate).
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Step by Step Answer:
1 Price of the bonds at January 1 2021 Interest 4000000 x 1146992 45879680 Principal 80000000 x 031180 24944000 Present value price of the bonds 70823680 5 80000000 Present value of an ordinary annuit...View the full answer
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Related Book For 
Intermediate Accounting
ISBN: 978-1260481952
10th edition
Authors: J. David Spiceland, James Sepe, Mark Nelson, Wayne Thomas
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