Determining the price of bonds; discount and premium; issuer and investor [LO14-2]

On January 1, 2024, Instaform, Incorporated, issued 10% bonds with a face amount of $49 million, dated January 1.

The bonds mature in 2043 (20 years).

The market yield for bonds of similar risk and maturity is 12%.

Interest is paid semiannually.

Required:

1-a. Determine the price of the bonds at January 1, 2024.

1-b. Prepare the journal entry to record their issuance by Instaform.

2-a. Assume the market rate was 9%. Determine the price of the bonds at January 1, 2024.

2-b. Assume the market rate was 9%. Prepare the journal entry to record their issuance by Instaform.

3. Assume Broadcourt Electronics purchased the entire issue in a private placement of the bonds. Using the data in requirement 2, prepare the journal entry to record the purchase by Broadcourt.

Note: Use tables, Excel, or a financial calculator. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1)