On January 1, 2011, Instaform, Inc., issued 10% bonds with a face amount of $50 million, dated

Question:

On January 1, 2011, Instaform, Inc., issued 10% bonds with a face amount of $50 million, dated January 1. The bonds mature in 2030 (20 years). The market yield for bonds of similar risk and is 12%. Interest is paid semiannually.

Required:
1. Determine the price of the bonds at January 1, 2011, and prepare the journal entry to record their issuance by Instaform.
2. Assume the market rate was 9%. Determine the price of the bonds at January 1, 2011, and prepare the journal entry to record their issuance by Instaform.
3. Assume Broadcourt Electronics purchased the entire issue in a private placement of the bonds. Using the data in requirement 2, prepare the journal entry to record the purchase by Broadcourt.

Maturity
Maturity is the date on which the life of a transaction or financial instrument ends, after which it must either be renewed, or it will cease to exist. The term is commonly used for deposits, foreign exchange spot, and forward transactions, interest...