Problem 10-1A Computing bond price and recording issuance LO P1

Hartford Research issues bonds dated January 1, 2013, that pay interest semiannually on June 30 and December 31. The bonds have a $40,000 par value and an annual contract rate of 10%, and they mature in 10 years.(Table B.1,Table B.2,Table B.3, andTable B.4)(Use appropriate factor(s) from the tables provided. Round all table values to 4 decimal places, and use the rounded table values in calculations.)

Required:

Consider each of the following three separate situations.

1.	The market rate at the date of issuance is 8%.

(a)	Complete the below table to determine the bonds' issue price on January 1, 2013.
	Table Values are based on: n= i= Cash Flow Table Value Amount Present Value Par (maturity) value $ $ Interest (annuity) $ $ Price of Bonds $

(b)	Prepare the journal entry to record their issuance.

2.	The market rate at the date of issuance is 10%.

(a)	Complete the below table to determine the bonds' issue price on January 1, 2013.
	Table Values are based on: n= i= Cash Flow Table Value Amount Present Value Par (maturity) value $ $ Interest (annuity) $ $ Price of Bonds $

b)	Prepare the journal entry to record their issuance.

3.	The market rate at the date of issuance is 12%.

(a)	Complete the below table to determine the bonds' issue price on January 1, 2013.
	Table Values are based on: n= i= Cash Flow Table Value Amount Present Value Par (maturity) value $ $ Interest (annuity) $ $ Price of Bonds $

(b)	Prepare the journal entry to record their issuance.