On January 1, 2020, Blue Co. sold 10 year, $1,000,000 face value, 10% coupon bonds at an effective interest rate (market yield) of 12%. Bond coupons are paid semiannually.

a) How will the selling price of the bonds be determined?

b) Were the bonds issued at a premium or a discount?

c) What are the cash proceeds from the bond issuance?

d) How will the bond issuance be recorded?

e) What was the immediate impact of recording the bond issuance on Blue's current ratio and debt to assets ratio?