Mindsetta Music Inc. issued bonds on March 1, 2023, with a par value of $300,000. The bonds mature in 15 years and pay 8% annual interest in two semiannual payments. On the issue date, the annual market rate of interest for the bonds turned out to be 10%.
a. What is the size of the semiannual interest payment for these bonds?
b. How many semiannual interest payments will be made on these bonds over their life?
c. Use the information about the interest rates to decide whether the bonds were issued at par, at a discount, or at a premium.
d. Estimate the market value of the bonds as of the date they were issued.
e. Present the journal entry that would be made to record the bonds’ issuance.