>> Accounting Basics
Question - Bond Problem
Consider a bond issue as follows:
Stated rate of interest 14%
Market rate of interest 20%
Maturity in five years
Semi-annual interest payments on June 30 and December 31
Date of issue on January 1, 2019
1. Determine the amount at which the bond was issued/sold for.
2. Prepare the journal entry for the issuance.
3. Prepare the journal entry for the first interest payment.
4. Prepare the journal entry for the second interest payment.
5. Prepare the Balance Sheet presentation at December 31, 2019.