Birks Company is considering issuing bonds to fund a project. You have been asked to aid in determining the selling prices and to prepare the journal entries for the issuance.

A .Birks is considering the following four issuances:

Issue	Maturity Value	Stated Interest Rate	Interest Payable	Life of Issue (Years)	Market Rate at Issue Date (per year)
1	$200,000	8%	Annually	10	8%
2\	$200,000	10%	Quarterly	5	12%
3	$150,000	10%	Semiannually	4	12%
4	$200,000	None	Annually	20	12%

1. Calculate the selling prices and prepare entries to record the issue for each of the issuances being considered.

B.Birks Company ultimately decided to issue $200,000 face value bonds on January 1, 2007. The stated rate on the bonds was 6%. The bonds call for interest to be paid semiannually on June 30 and December 31, and the principal must be repaid on December 31, 2011 (five years from the issue date). At the time the bonds were issued, investor sentiment about similar bonds of similar companies was such that the going rate (the market rate) for such bonds was 8%.

1. How much cash will Birks Company receive from this bond issue (ignore bond issue costs)?

2. Prepare an amortization schedule for the bonds.

3. Provide the journal entries that would be required to record the bond issue on January 1, 2007 and the cash interest payments on June 30, 2007, December 31, 2007, June 30, 2008, and December 31, 2008.

4. Prepare an amortization schedule for the bonds, this time assuming that the market rate was 5%.