Question no. 2

EXE Company issues $2 million, 10-year, 10% bonds at 95 (i.e. at 95% of face value), with interest payable on July 1 and January 1.

a. Prepare the journal entry to record the sale of these bonds on January 1, 2010.

b. Assuming instead that the above bonds sold for 106, prepare the journal entry to record the

sale of these bonds on January 1, 2010.