Madrid Company plans to issue 8% bonds on January 1, 2013, with a par value of $4,000,000.

Question:

Madrid Company plans to issue 8% bonds on January 1, 2013, with a of $4,000,000. The company sells $3,600,000 of the bonds on January 1, 2013. The remaining $400,000 sells at par on March 1, 2013. The bonds pay interest semiannually as of June 30 and December 31. Record the entry for the March 1 cash sale of bonds.

Par Value
Par value is the face value of a bond. Par value is important for a bond or fixed-income instrument because it determines its maturity value as well as the dollar value of coupon payments. The market price of a bond may be above or below par,...