Question
The Beta company issued bonds with a par value of $ 50 million and a nominal interest rate of 6.50%. The bonds pay interest every
The Beta company issued bonds with a par value of $ 50 million and a nominal interest rate of 6.50%. The bonds pay interest every six months on January 1 and July 1. They were issued on July 1, 2019 and on that date had a duration of 20 years. On the issuance date, the market interest rate (yield) was 5.25%.
a. Prepare the journal entry to record the issuance of the bonds on July 1, 2019.
b. Prepare the wage entry for July 1, 2020.
c. If, with eight years (16 semesters) remaining for the bonds to mature, the company withdraws them in the amount of $ 56 million, prepare the wage entry to record the transaction.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started