Question
Suppose that ABC Co. were to issue a 5-year, $108,000 bond that had a coupon rate of 5% and paid interest annually under each
Suppose that ABC Co. were to issue a 5-year, $108,000 bond that had a coupon rate of 5% and paid interest annually under each of the following alternatives: (a) yield rate = 4%, assuming the issue price is $112.808.27. (b) yield rate 5%, assuming the issue price is $108,000. (c) yield rate = 6%, assuming the issue price is $103,450.82. Prepare the journal entries for both the issuance of the bond as well as the first interest payment when the yield rate is 4%. (Round answers to 2 decimal places, e.g. 15.25. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts.) Account Titles and Explanation Debit Credit (To record issue of bonds) (To record interest payment) List of Accounts
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