Both the reported value of long-term debt and periodic interest charges should be based on unamortized issue

Question:

Both the reported value of long-term debt and periodic interest charges should be based on unamortized issue price (plus or minus unamortized premiums or discounts) and initial yield.
The City of Fairfield issued $100 million of 20-year. 6 percent bonds (3 percent per semiannual period) for $89.32 million. The price reflected a yield of 7 percent (3.5 percent period semiannual period).
1. Prepare entries to reflect how the following would be reported in the city's government-wide statements:
a. The issuance of the bond
b. The first semiannual payment of interest
c. The second semiannual payment of interest
2. Prepare entries to account for the same transactions in an appropriate governmental fund.
Coupon
A coupon or coupon payment is the annual interest rate paid on a bond, expressed as a percentage of the face value and paid from issue date until maturity. Coupons are usually referred to in terms of the coupon rate (the sum of coupons paid in a...