Fortune Systems issues bonds dated January 1, 2011, that pays interest semiannually on June 30 and December 31. The bonds have a $35,000 par value, an annual contract rate of 4%, and mature in four years.
Required
For each of the following three separate situations.
(a) Determine the bonds’ issue price on January 1, 2011.
(b) Prepare the journal entry to record their issuance.
1. Market rate at the date of issuance is 2%.
2. Market rate at the date of issuance is 4%.
3. Market rate at the date of issuance is 6%.