Stower Research issues bonds dated January 1, 2011, That pay interest semiannual

Question

Stower Research issues bonds dated January 1, 2011, That pay interest semiannually on June 30 and December 31. The bonds have a $20,000 par value and an annual contract rate of 10%, and they mature in 10 years. Required: For each ofthe following three separate, (a) determine the bonds' issue price on January 1, 2011, and (b) prepare the journal entry to record their issuance. 1. The market rate at the date of issuance is 8%. 2. The market rate at the date of issuance is 10%. 3. The market rate at the date of issuance is 12%. Thank you

Explanation / Answer

The following symbols are used to designate present value factor: (pv1, i, n) = present value of $1 discounted at i%, n periods from present (pva, i, n) = present value of an annuity of $1 discounted at i%, for n periods 1. Market rate at the date of issuance is 8%. (a) bonds

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