Question
Boat Company issued $1,000,000 of 5-year bonds dated January 1, 2020. The stated interest rate was 7%. Interest is paid semiannually. At the time of
Boat Company issued $1,000,000 of 5-year bonds dated January 1, 2020. The stated interest rate was 7%. Interest is paid semiannually. At the time of the issuance, the market or yield rate was 6%.
a) What is the issuance price for the bonds? $__________
b) Provide the entry to record Boat's issuance of the bonds.
c) Provide the entry on Boat's Books for the first interest payment.
d) Provide the entry on Boat's Books for the second interest payment.
e) Provide the entry on Boat's Books for the retirement of the bond at maturity.
Burt Company purchases all of the bonds with the intention of holding them to maturity.
f) Provide the entry to record Burts purchase of the bonds.
g) Provide the entry on Burts books for the first interest payment.
h) Provide the entry on Burts books for the second interest payment.
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