Requirement $1.$ If the market interest rate is $11\frac{5}{8}\%$ when XTrade issues its bonds, will the bonds be priced at face value, a premium, or a discount? Explain.

The $12\frac{1}{2}\%$ bonds issued when the market interest rate is $11\frac{5}{8}\%$ will be priced at

They are

in this market, so investors will pay

to acquire them.

Requirement $2.$ If the market interest rate is $17\%$ when XTrade issues its bonds, will the bonds be priced at face value, a premium, or a discount? Explain.

The $12\frac{1}{2}\%$ bonds issued when the market interest rate is $17\%$ will be priced at $,$grad They are $$ to acquire them.

Requirement $3.$ Assume that the issue price of the bonds is $98.$ Journalize the following bond transactions. $($Record debits first, then credits. Explanations are not required.$)$

a$.$ Issuance of the bonds on February $28,2020.$

b$.$ Payment of interest and amortization of the bonds on August $31,2020.$

c$.$ Accrual of interest and amortization of the bonds on December $31,2020.($Hold all decimals for interim calculations. Round your final answer to the nearest dollar.$)$

d$.$ Payment of interest and amortization of the bonds on February $28,2021.($Hold all decimals for interim calculations. Round your final answer to the nearest dollar.$)$

Required

If the market interest rate is $11\frac{5}{8}\%$ when $xT$ rade issues its bonds, will the bonds be priced at

face value, a premium, or a discount? Explain.

If the market interest rate is $17\%$ when XTrade issues its bonds, will the bonds be priced at

face value, a premium, or a discount? Explain.

Assume that the issue price of the bonds is $98.$ Journalize the following bond transactions:

a$.$ Issuance of the bonds on February $28,2020.$

b$.$ Payment of interest and amortization of the bonds on August $31,2020.$

c$.$ Accrual of interest and amortization of the bonds on December $31,2020.$

d$.$ Payment of interest and amortization of the bonds on February $28,2021$

Report interest payable and bonds payable as they would appear on the XTrade balance sheet at

December $31,2020$