On February 28,2016 Marlin Corp. issues 10%, 20 years bonds payable with a face value of $2,100,000. The bonds pay interest on February 28 and august 31 . Marlin corp. amortizes bond discount by the straight line method.

1. If the market interest rate is 9% when Marlin 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 Marlin 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 2016. discount on August 31, 2016 b. Payment of interest and amortization of the bond on December 31, 2016 the c. Accrual of interest and amortization of the bond discount year-end discount on February 28 2017 d. Payment of interest and amortization of the bond Corp balance 4. Report interest payable and bonds payable as they would appear on the Marlin sheet at December 31, 2016