Assume that the following are independent situations recently reported in the Wall Street Journal.
1. General Electric (GE) 7% bonds, maturing January 28, 2018, were issued at 111.12.
2. Boeing 7% bonds, maturing September 24, 2032, were issued at 99.08.
Instructions
(a) Were GE and Boeing bonds issued at a premium or a discount?
(b) Explain how bonds, both paying the same contractual interest rate, could be issued at different prices.
(c) Prepare tabular summaries to record the issue of each of these two bonds, assuming each company issued $800,000 of bonds in total.