On January $1,2024,$ Neighborhood Credit Union $($NCU$)$ issued $6\%,20-$year bonds payable with face value of $$800,000.$ The bonds pay interest on June $30$ and December $31.$

Read the requirements.

Requirement $1.$ If the market interest rate is $5\%$ when NCU issues its bonds, will the bonds be priced at face value, at a premium, or at a discount? Explain.

The $6\%$ bonds issued when the market interest rate is $5\%$ will be priced at $$ They are $$ in this market, so investors will pay $$ to acquire them.

Requirement $2.$ If the market interest rate is $8\%$ when NCU issues its bonds, will the bonds be priced at face value, at a premium, or at a discount? Explain.

The $6\%$ bonds issued when the market interest rate is $8\%$ will be priced at $$ They are $$ in this market, so investors will pay less than face value to acquire them. the journal entry. Round your answers to the nearest whole dollar.$)$

a$.$ Journalize the issuance of the bonds on January $1,2024.$

$\backslash$table$[[$Date$,$Accounts and Explanation,Debit,Credit$],[2024,,,],[$Jan$.1,,,],[,,,],[,,,],[,,,],[,,,]]$

Requirements

If the market interest rate is $5\%$ when NCU issues its bonds, will the bonds be priced at face value, at a premium, or at a discount? Explain.

If the market interest rate is $8\%$ when NCU issues its bonds, will the bonds be priced at face value, at a premium, or at a discount? Explain.

The issue price of the bonds is $95.$ Journalize the following bond transactions:

a$.$ Issuance of the bonds on January $1,2024.$

b$.$ Payment of interest and amortization on June $30,2024.$

c$.$ Payment of interest and amortization on December $31,2024.$

d$.$ Retirement of the bond at maturity on December $31,2043,$ assuming the last interest payment has already been recorded.

Clear all