On February 28, 2021, Hackle Corp. issues 10%, 10-year bonds payable with a face value of $1,200,000. The bonds pay interest on February 28 and August 31. The company amortizes bond discount using the straight-line method. Read the requirements The 10% bonds issued when the market interest rate 9% will be priced at a premium They are attractive in this market, so investors will pay more than par value to acquire them. Requirement 2. If the market interest rate is 11% when Hackle Corp. issues bonds, will the bonds be priced at par, at a premium, or at a discount? Explain. The 10% bonds issued when the market interest rate is 11% will be priced at a discount They are unattractive in this market, so investors will pay less than par value to acquire them. Requirement 3. Assume that the issue price of the bonds is 99. Journalize the following bonds payable transactions. (Record debits first, then credits. Exclude explanations from journal entries.) a. Record the issuance of the bonds on February 28, 2021. Journal Entry 2021 Accounts Debit Credit - Feb 28 1,188,000 12.000 Requirements Cash Discount on Bonds Payable Bonds Payable 1,200,000 b. Payment of interest and amortization of the bond discount on August 31, 2021. Journal Entry 2021 Accounts 31 Interest Expense Discount on Bonds Payable Cash Credit Debit 60,600 1. If the market interest rate is 9% when Hackle Corp. issues its bonds, will the bonds be priced at par, at a premium, or at a discount? Explain. 2. If the market interest rate is 11% when Hackle Corp. issues its bonds, will the bonds be priced at par, at a premium, or at a discount? Explain. 3. Assume that the issue price of the bonds is 99. Journalize the following bonds payable transactions. a. Issuance of the bonds on February 28, 2021 b. Payment of interest and amortization of the bond discount on August 31, 2021 c. Accrual of interest and amortization of the bond discount on December 31, 2021 (fiscal year- end) d. Payment of interest and amortization of the bond discount on February 28, 2022 4. Report interest payable and bonds payable as they would appear on Hackle Corp.'s balance sheet at December 31, 2021. Aug 600 60,000 c. Accrual of interest and amortization of the bond discount on December 31, 2021 (fiscal year-end). Journal Entry 2021 Accounts Debit Credit Print Done Dec 31 Help Me Solve This Calculator Print Clear All Check