Question
On January 1, 2022, Jones Corp. issues $3,500,000 in 10-year bonds that pay 7%, while bonds of similar risk and maturity are paying 8%. They
On January 1, 2022, Jones Corp. issues $3,500,000 in 10-year bonds that pay 7%, while bonds of similar risk and maturity are paying 8%. They pay interest semi-annually on June 30th and December 31". They use the effective interest method to calculate interest expense.
SHOW YOUR WORK. Include calculations, rates, and factors.
REQUIREMENT 1
Provide the number of compounding periods for the bonds,
Provide the market interest rate per compounding period,
Provide the amount of cash paid for each semi-annual interest payment,
Provide the total cash received at issuance for the bonds.
Was this bond issued at a discount or a premium?
REQUIREMENT 2 :
Prepare the journal entry to record issuance of the bonds on January 1, 2022 by Jones Corp::
REQUIREMENT 3 :
Prepare the journal entry to record the interest payment on June 30, 2022 by Jones Corp.:
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