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Assume that on April 1, 2018, Washington Corp. issues 5 percent, 10-year bonds payable with a maturity value of $1,000,000. The bonds pay interest on
Assume that on April 1, 2018, Washington Corp. issues 5 percent, 10-year bonds payable with a maturity value of $1,000,000. The bonds pay interest on March 31 and September 30, and Washington amortizes any premium or discount using the straight-line method. Washington's fiscal year end is December 31. Read the requirements. Requirement 1. If the market interest rate is 4.5 percent when Washington Corp. issues its bonds, will the bonds be priced at par, at a premium, or at a discount? Explain. The 5 percent bonds issued when the market interest rate is 4.5 percent will be priced at Requirements They are 1. If the market interest rate is 4.5 percent when Washington Corp. issues its bonds, will the bonds be priced at par, at a premium, or at a discount? Explain. 2. If the market interest rate is 5.5 percent when Washington Corp. issues its bonds, will the bonds be priced at par, at a premium, or at a discount? Explain. 3. Assume that the issue price of the bonds is $1,030,000. Journalize the following bonds payable transactions (round amounts to the nearest dollar): a. Issuance of the bonds on April 1, 2018 b. Payment of interest and amortization of premium on September 30, 2018 c. Accrual of interest and amortization of premium on December 31, 2018 d. Payment of interest and amortization of premium on March 31, 2019 in this market, so investors will pay to acquire them
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