The following appeared in the January 1, 2021, issue of the Up2Date Financial & Accounting Times: The announcement describe below is not an offer of securities for sale or an offer to buy securities.

New Issue January 1, 2021

$550,000,000 AWESOME ACCOUNTING STUDENTS

8.15% Debentures Due October 1, 2031 Price 98.90%

Required: (Show step by step)

1. Based on the information provided in the announcement, were the bonds issued at a premium or discount?
   1. Is the market rate of interest higher or lower relative to the 8.15% indicated?
2. Based on the information provided, what is the selling price of the bonds?
3. If debt issue costs were $50,000 and the bonds were issued on an January 1, 2021, what entry did Awesome Accounting Students use to record the sale?
4. In practice, what do you think is a more common pricing of bonds (discount or premium)? Explain, why?