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The Kitchener Company issued bonds with a par value of $150 000 on their initial issue date. The bonds mature in 15 years and pay 8% annual interest in two semi-annual payments. On the issue date, the annual market rate of interest for the bonds was 10%.
Problem a) What is the size of the semi-annual interet payment for these bonds?
Problem b) How many semi-annual interest payments will be paid on these bonds over their life?
Problem c) Were the bonds issued at par, at a discount, or at a premium?
Problem d) Estimate the market value of the bonds as of the date they were issued?
Problem e) Present the journal entry that would be made to record the bonds issuance and the first monthly interest payment.
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