On January 1, 2012, Seward Corporation issues $100,000 face value, 8% semiannual coupon bonds maturing three years

Question:

On January 1, 2012, Seward issues $100,000 8% semiannual bonds maturing three years from the date of issue. The coupons, dated for June 30 and December 31 of each year, each promise 4% of the 8% total for a year. The firm issues the bonds to yield 10%, compounded semiannually.
a. Compute the initial issue proceeds of these bonds.
b. Construct an amortization schedule, similar to that in Exhibit 11.2, for this bond issue, assuming that Seward Company uses amortized cost measurement based on the historical market interest rate to account for the bonds.
c. Give the journal entries related to these bonds for 2012. Seward uses the calendar year as its reporting period.
d. On January 1, 2014, Seward reacquires $20,000 of these bonds for 102% of and retires them. Give the journal entry to record the retirement.

Corporation
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may... 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... Face Value
Face value is a financial term used to describe the nominal or dollar value of a security, as stated by its issuer. For stocks, the face value is the original cost of the stock, as listed on the certificate. For bonds, it is the amount paid to the...