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2.2 A company issued 10%, 5-year bonds with a par value of $1,000,000 on June 30, when the market rate was 8%. Interest is paid
2.2 A company issued 10%, 5-year bonds with a par value of $1,000,000 on June 30, when the market rate was 8%. Interest is paid semiannually on December 31 and June 30. Compute the price of the bonds on their issue date. Use the present value tables in the back of your textbook and the following table to calculate the price of the bonds. Number of Periods: Stated Interest Rate Per Period: Cash Flow Amount Par Value (Maturity) Interest (Annuity) Total Price Market Interest Rate Per Period: Table Value Present Value The company uses the effective interest amortization method to record the interest expense for the bonds. Use the following table to calculate the interest expense. Cash Interest Paid Bond Interest Expense Premium Amortization Unamortized Premium Carrying Value Semiannual Interest Period Issue Date December 31 June 30 (a) Prepare the issuer's journal entry to record the issuance of the bonds on June 30. (b) Prepare the issuer's journal entry to record the semiannual interest payment on December 31, Year 1. SHOW YOUR WORK Prepare Account Debit Credit
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