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The ECC District is preparing to sell bonds to improve their campus. The cost of the project is $$900,000$ and the bond market has recently been unpredictable. They are offering a $$900,000$ bond with a $6\%$ interest rate payable annually. Maturity will be in $10$ years. Working space for requirements #$1-10.$

For journal entry requirements

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#$11.$ Answer:

They need to consider $2$ possible outcomes and need information for both.

Case #$1$: The market interest rate at time of issuance is $6\mathrm{.}5\%.$ Proceeds from sale are $$850,000.$ Method of amortization is Straight Line.

Case #$2$: The market interest rate at time of issuance is $5\mathrm{.}75\%.$ Proceeds from sale are $$916,760.$ Method of amortization is Effective.