Morneau Automation Ltd. issued 6%, 10-year bonds with a face value of $100 million at par on

Question:

Morneau Automation Ltd. issued 6%, 10-year bonds with a face value of $100 million at par on May 1, 2020. The bonds pay interest on October 31 and April 30 each year. The first interest payment was made on October 31, 2020. Morneau’s year end is December 31.

Required

a. Determine the cash received on issuance and the yield for the 10-year bonds issued by Morneau Automation.

b. Prepare the journal entry for the issuance of the bond.

c. Prepare the journal entries required at October 31 and December 31, 2020, and the entry for the interest payment on April 30, 2021.

Face Value
Face value is a financial term used to describe the nominal or dollar value of a security, as stated by its issuer. For stocks, the face value is the original cost of the stock, as listed on the certificate. For bonds, it is the amount paid to the...

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