Hi there!

Please see below if answers to 1-4 are correct and if so, i would appreciate the answers for the last four questions as well. thank you!

Problem: Bond contract rate = 7% semi-annual Bond par = $10,000 Bond market rate = 6% semi-annual Bond life = 10 years 1. Find the selling price of this bond 2. Will it be sold at a discount or premium? 3. Do the journal entry for the issuance 4. Calculate the discount/premium amortization per period (use the straight-line method) 5. Do the entry for the payment of cash interest per period 6. Do the entry for the amortization of the discount/premium per period 7. Find total interest expense per period 8. Show the balance sheet presentation of the bond after two periods have elapsed Solution: Answering first four questions as per Chegg's guidelines: Calculation of selling price of bond: Selling price of bond is the present value of expected future cash flows on it.calculation of selling price of bond is as follow: Since coupon is paid semiannually, hence No. of period=10*2=20 Periodic coupon=$10,000*7%*1/2=$350 Periodic market rate=[1+(0.06/2)]^2-1)/2 =0.03045 or 3.045% Selling Price of bond=Periodic coupon*PVAF(3.045%, 20)+Maturity value*PVIF(3.045%,20) =$350*15.08545+$10,000*0.546396 = $10,743.87 b) Since bond selling price is higher than its Par value, hence it is sold at premium. c)Journal entry for issuance of bond Cash/Bank A/C dr $10,743.87 To Bonds payable A/C $10,000 To Premium on bonds payable A/C $743.87 (Being bond issued at premium) d) Premium amortization per period is; =Total Premium received/No.of periods to maturity =$743.47/20 =$37.17