On December 31, 2015, Jenna Corp issued $1,000,000, 8%, 5-year bonds. Interest is payable semi-annually on June 30 and December 31. The corporation uses the effective interest method of amortizing bond premium or discount.

Required

a. Using the present value tables, estimate the issue price of the bonds under the following three assumptions:

i. Market Rate is 8%

ii. Market Rate is 6%

iii. Market Rate is 10%

b. Prepare the journal entries for each of the assumptions