On January 1, 2024, Global Satellites Ltd. issued $1.4-million, 10-year bonds. The bonds pay semi-annual interest on July 1 and January 1, and Global has a December 31 year end. A partial bond amortization schedule is presented below:

Instructions 

a. Were the bonds issued at a premium or a discount?

b. What is the face value of the bonds? 

c. What is the contractual rate of interest?

d. Fill in the missing amounts for items [1] through [5]. 

e. What was the market interest rate when the bonds were issued? 

f. Record the issue of the bonds on January 1, 2024. 

g. Record the interest payment on July 1, 2024. 

h. Record the accrual of interest on December 31, 2024. 

Why would Global’s board of directors not have set the contractual interest rate at the market interest rate on the date of issue when it authorized the bond issue?

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Semi-Annual Interest Period Interest Payment Jan. 1, 2024 July 1, 2024 Jan. 1, 2025 July 1, 2025 Jan. 1, 2026 July 1, 2026 Jan. 1, 2027 $ [1] 42,000 42,000 42,000 42,000 42,000 Interest Expense $ [2] 45,641 45,769 45,900 46,037 46,178 Carrying Amortization Amount of Bonds $3,518 3,641 [3] [4] 4,037 4,178 $1,300,514 1,304,032 1,307,673 1,311,442 [5] 1,319,379 1,323,557