Tables:

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Use Table PV-1 (in Exhibit B-7) and Table PV-2 (in Exhibit B-9) On June 30 of the current year, Rural Gas & Electric Co. issued $50,000,000 face value, 9 percent, 10-year bonds payable, with interest dates of December 31 and June 30. The bonds were issued at a discount, resulting in an effective semiannual interest rate of 5 percent. Compute the issue price for the bond that results in an effective semiannual interest rate of 5 percent. (Hint: Discount both the interest payments and the maturity value over 20 semiannual periods.) (Round your PV factor to 3 decimal places and final answer to the nearest dollar amount. Omit the "$" sign in your response.) Prepare a journal entry to record the issuance of the bonds at the sales price you computed in part a.(Round your PV factor to 3 decimal places and final answer to the nearest dollar amount. Omit the "$" sign in your response.) Why were the bonds issued at a discount? The bonds were sold at a discount because the coupon rate of interest, 9%, was less than the market rate of interest, 10%. The bonds were sold at a discount because the coupon rate of interest, 10%, was more than the market rate of interest, 9%