On june 30 of the current year rural gas amp electric co

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On June 30 of the current year, Rural Gas & Electric Co. issued $60,000,000 face value, 9 percent, 10-year bonds payable, with interest dates of December 31 and June 30. The bonds were issued at a discount, resulting in an effective semiannual interest rate of 5 percent. Use Table PV-1 (in Exhibit B-7) and Table PV-2 (in Exhibit B-9) Instructions a. Compute the issue price for the bond that results in an effective semiannual interest rate of 5 percent. (Hint: Discount both the interest payments and the maturity value over 20 semiannual periods.) (Round PV factor to 3 decimal places.)

b. Prepare a journal entry to record the issuance of the bonds at the sales price you computed in part a. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

Reference no: EM13588018

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