On January 1, 2019, Boulder Corp. issued bonds with a total face value of $700,000.

The bonds pay interest semiannually every June 30 and December 31. They are due in three years at December 31, 2021.

The stated rate of interest is 9%, and the bonds were sold to yield 8%.

Requirements:

1. Based on a market rate of 8%, and a stated rate of 9%, the bonds will sell at a:

Premium Discount (indicate the correct answer)

2. Compute the amount of the semiannual cash interest payment.

3. Compute the price of the bonds (round to the nearest whole dollar).

4. Prepare the journalentry on January 1, 2019 to record the issuance of the bonds.

5. Prepare an effective interest method amortization table for the life of the bond issue (round to the nearest whole dollar). Here are appropriate row and column headings for your table:

Interest Cash Amortization of Unamortized Book Value of

Date Expense Interest Discount/Premium Discount/Premium Bonds

1/1/19 na na na

6/30/19

12/31/19

6/30/20

12/31/20

6/30/21

12/31/21

6. Prepare the journal entry for the first interest payment at 6/30/19

7. Prepare the journal entry for the final interest payment at 12/31/21 and for the payoff of the maturity of the bonds. You can make one entry or two separate entries.