On January 1, 2008, Tusk Corporation issued $100 million of 10% coupon bonds at par value.
Interest is paid semiannually on June 30 and December 31 of each year. The bonds mature in 10 years. On January 1, 2011, the market yield on Tusk bonds is 14%.
Required:
1. What is the market value of the bonds on January 1, 2011?
2. Suppose that Tusk retired the bonds on January 1, 2011 by exchanging common stock of equal value with bondholders. What journal entry would Tusk record to retire the bonds?