Part $1$ of $6$

Points: $0$ of $1$

On January $1,2016,$ Professors Credit Union $($PCU$)$ issued $8\%,20-$year bonds payable with face value of $$500,000.$ The bonds pay interest on June $30$ and December $31.$

Read the requirements.

Requirement

The $8\%$ bonds

Requirements

If the market interest rate is $7\%$ when PCU 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 $9\%$ when PCU 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 $92.$ Journalize the following bond transactions:

a$.$ Issuance of the bonds on January $1,2016.$

b$.$ Payment of interest and amortization on June $30,2016.$

c$.$ Payment of interest and amortization on December $31,2016.$

d$.$ Retirement of the bond at maturity on December $31,2035.$

discount? Explain.

ors will pay $$ to acquire the to acquire the to acquire the