Assume that on April 1, 2018, Easter Corp. issues 5 percent, 10-year bonds payable with a maturity value of $1,200,000. The bonds pay interest on March 31 and September 30, and Easter amortizes any premium or discount using the straight-line method, Easter's fiscal year end is December 31 Read the requirements Requirement 1. If the market interest rate is 4 percent when Easter Corp. issues its bonds, will the bonds be priced at par, at a premium, or at a discount? Explain. The 5 percent bonds issued when the market interest rate is 4 percent will be priced at a premium They are attractive in this market, so investors will pay more than maturity value to acquire them Requirement 2. f the market interest rate is 6.5 percent when Easter Corp. issues its bonds, will the bonds be priced at par, at a premium, or at a discount? Explain The 5 percent bonds issued when the market interest rate is 6.5 percent will be priced as a discount They are unattractive in this market, so investors will pay less than maturity value acquire them Requirement 3. Assume that the issue price of the bonds is $1.248,000. Journalize each of the bonds payable transactions. (Do not round any intermediary computations, but the round al amounts you input into the journal entry takes to the nearest whole door Recorders first, then credits. Exclude explanations from any journal entries) a. Issuance of the bonds on April 1, 2018 Journal Entry Accounts Date Debit Credit Choose from any list or enter any number in the input fields and then continue to the next question 4 esc DIL ( # & @ 96 ) $ bac 00 3 4 6 2 5 7 9 Assume that on April 1, 2018, Easter Corp. issues 5 percent, 10-year bonds payable with a maturity value of $1,200,000. TI any premium or discount using the straight-line method. Easter's fiscal year end is December 31. Read the requirements. a. Issuance of the bonds on April 1, 2018. Journal Entry Date Debit Credit Apr 1, 2018 1,248,000 Accounts Cash Premium on bonds payable Bonds payable 48,000 1,200,000 b. Payment of interest and amortization of premium on September 30, 2018 Journal Entry Date Accounts Debit Credit Sep 30, 2018 Interest expense 58,200 Choose from any list or enter any number in the input fields and then continue to the next question. Assume that on April 1, 2018, Easter Corp. issues 5 percent, 10-year bonds payable with a maturity value of $1,200,000. The bonds any premium or discount using the straight-line method. Easter's fiscal year end is December 31. Read the requirements C. Accrual of interest and amortization of premium on December 31, 2018 Debit Credit Journal Entry Date Accounts Dec 31, 2018 Interest expense Premium on bonds payable Interest payable 18,000 2,000 20,000 d. Payment of interest and amortization of premium on March 31, 2019 Journal Entry Date Accounts Debit Credit Mar 31, 2019 Interest payable 39,000 Choose from any list or enter any number in the input fields and then continue to the next question. o N