Journal entries to account for bonds. Brooks Corporation issues $100,000 face value, 10-year bonds on January 2, Year 2. The bonds' coupons, dated June 30 and December 31 of each year, each promise 4 percent of face value, X percent total for a year. The market initially prices the bonds to yield 6 percent compounded semiannually.

a. Compute the issue price of the bonds.

b. Give the journal entries to account for these bonds during Year 2.

c. Brooks Corporation reacquires these bonds on the open market on January 2. Year 3, at a time when the market prices the bonds to yield 10 percent compounded semiannually.

Give the journal entry to record the reacquisition.

PROBLEMS AND CASES