Prepare the journal entry to record the purchase

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On January 1, 2011, Instaform, Inc., issued 10% bonds with a face amount of $50 million, dated January 1. The bonds mature in 2030 (20 years). The market yield for bonds of similar risk and maturity is 12%. Interest is paid semiannually.

Required:

1. Determine the price of the bonds at January 1, 2011, and prepare the journal entry to record their issuance by Instaform.

2. Assume the market rate was 9%. Determine the price of the bonds at January 1, 2011, and prepare the journal entry to record their issuance by Instaform.

3. Assume Broadcourt Electronics purchased the entire issue in a private placement of the bonds. Using the data in requirement 2, prepare the journal entry to record the purchase by Broadcourt.

Reference no: EM13141740

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