Question
Bonds data: Par value: $1,000,000. Bond term: 5-years. Stated interest rate: 14% annually; Market interest rate: 10% annually; Interest is paid annually on April 1
Bonds data:
Par value: $1,000,000.
Bond term: 5-years.
Stated interest rate: 14% annually;
Market interest rate: 10% annually;
Interest is paid annually on April 1st of each year.
Required: Calculate the bond selling price (Round all amounts to the nearest dollar):
Bond selling price = _____________________________
Is this bond issued with premium or discount? ____________________
*If you were not able to find bond selling price above, proceed assuming selling price was $1,100,000
Make journal entry corresponding to issuing such bond
Make adjusting journal entry at the end of the first year
Make journal entry representing the first coupon payment
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