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 $30,000 par value and an annual contract rate of 10%, and they mature in 10 years. (Table B.1, Table B.2, Table B.3, and Table 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 Price of bonds (b) Prepare the journal entry to record their issuance. Record the issue of bonds with a par value of $30,000 cash on January 1, 2013. Assume that the market rate of interest at the date of issue is 8%. 2. The market rate at the date of issuance is 10%. (a) Complete teh 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 Price of bonds (b) Prepare the journal entry to record their issuance. Record teh issue of bonds with a par value of $30000 cash on January 1, 2013. Assume that the market rate of interest at the date of issue is 10%.