On January 1, 2013, Boston Enterprises issues bonds that have a $1,600,000 par value, mature in 20 years, and pay 8% interest semiannually on June 30 and December 31. The bonds are sold at par.

1.

How much interest will Boston pay (in cash) to the bondholders every six months?

Par (maturity) value X semi annual rate= semiannual cash intrest payment

2.	Prepare journal entries for the following.

(a)

The issuance of bonds on January 1, 2013.

(b)	The first interest payment on June 30, 2013.

(c)

The second interest payment on December 31, 2013.

3.	Prepare the journal entry for issuance of bonds assuming.

(a)

The bonds are issued at 98. Record the issue of bonds with a par value of $1,600,000 at 98 cash on January 1, 2013.

(b)	The bonds are issued at 102. Record the issue of bonds with a par value of $1,600,000 at 102 cash on January 1, 2013.