To who may concern: i am submitting this question for the third time and seem that always missing a procedure answered. In both occasion forgot to explained the PV tables and the journal entries and my last question made a computed the market rate as 8% when the exercise stated 6% and the same errors as the previous answered too. Please this will be my third try. I really need your help, thanks.

3 year Bonds are issued at face value of $100,000 on January 1,2016, a stated

interest rate of 8%, and market rate of 6%.

a. Calculate the issue price of the Bonds.

b. Prepare the schedule of amortization using the effective interest method.

c. Prepare journal entries of 1/1/2016 and 12/31/2016.

The issue price of a bond is based on the relationship between the interest rate that the bond pays and the market interest rate being paid on the same date. The basic steps required to determine the issue price of a bond are 1. Determine the interest paid by the bond 2. Find the present value of the bond. 3. Calculate present value of interest payments 4. Calculate bond price : which is the sum of the present value of the bond repayment that is due at its maturity in five years, and the present value of the related stream of future interest payments. Answer to Point 1 : Selling Price of Bond at Par Face Value = $ 1,00,000 Interest Rate = 8 % Market Rate = 8 % To Find = Issue Price of Bond PV Table Years 8% 1 0.9259259 3 2 0.8573388 2 3 0.7938322 4 Total 2.5771 Step 1 Interest paid by Bond = 100000 X 8% $ 8,000 Step 2 Present Value of Bond = 100000 X 0.793832 79,383 Step 3 $ Present value of interest payments = 8000 X 2.5771 20,617 Step 4 $ Bond Issue price = 79383 + 20617 Issue Price 1,00,000 $