Stowers Research issues bonds dated January 1, 2011, that pay interest semiannua
ID: 2380645 • Letter: S
Question
Stowers Research issues bonds dated January 1, 2011, that pay interest semiannually on June 30 and December 31. The bonds have a $28,000 par value and an annual contract rate of 8%, and they mature in 10 years.1. The market rate at the date of issuance is 6%. (a) Determine the bonds' issue price on January 1, 2011.(b) Prepare the journal entry to record their issuance.2. The market rate at the date of issuance is 8%. (a) Determine the bonds' issue price on January 1, 2011.(b) Prepare the journal entry to record their issuance.3 The market rate at the date of issuance is 12%. (c) Determine the bonds' issue price on January 1, 2011.(c) Prepare the journal entry to record their issuance.
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