Question
DEF Company issued $1,000,000 of 10-year bonds payable with a stated interest rate of 8%, payable semi-annually. The market interest rate at the time of
DEF Company issued $1,000,000 of 10-year bonds payable with a stated interest rate of 8%, payable semi-annually. The market interest rate at the time of issuance was 6%. Requirements: a. Calculate the issue price of the bonds. b. Prepare the journal entry to record the issuance of the bonds. c. Determine the total cash interest payment for the first interest period. d. Calculate the carrying value of the bonds at the end of the first interest period. e. Analyze the impact of the bond issuance on the income statement and balance sheet.
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