Using the information from BE14- 11, determine the issue price of the bonds, assuming that the market rate of interest is 12% and prepare the journal entry to record the bond issue under IFRS using the net method.
In BE14- 11
On January 1, Plum Company issued $ 800,000 par value, 8%, 5- year bonds ( i. e., there were 800 $ 1,000 par value bonds in the issue). Interest is payable semiannually each January 1 and July 1 with the first interest payment due at the end of the period on July 1. Plum paid $ 9,000 in underwriting fees. Determine the issue price of the bonds with a 12% market rate of interest and prepare the journal entry to record the bond issue using a premium or discount account if needed.