Question: Question 2: Chupack Ltd. has issued bonds with a face value of $2,200,000. The bonds were issued on Jan 1st, 2015. The company got $2,403,407

Question 2: Chupack Ltd. has issued bonds with a face value

Question 2: Chupack Ltd. has issued bonds with a face value of $2,200,000. The bonds were issued on Jan 1st, 2015. The company got $2,403,407 in cash for the bonds. The bonds carry 10% annual coupon rate with interest payable at the end of the year, and maturity of 6 years. Investors demand 8% annual yield for similar risk bonds. Required: a. Were the bonds issued in a discount or premium? Explain why. b. Show Interest expense, Discount/premium amortization, Discount/premium balance and Bonds payable, net, for each of the 6 years using the following table (copy-paste the table on the google form as-is, no need to edit and correct how it turns out on the form): Interest | discount/premium expense amortization discount/premium balance Bonds Payable, net Year Coupon 0 2015 2016 2017 2018 2019 2020 C. Record journal entries related to the bonds for the first 2 years. d. Assume that after 3 years and after payment of third coupon the company repurchases the bonds for $2,270,000. Calculate gain/loss on bond repurchase

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