Question

On January 1, 2016, Bishop Company issued 12% bonds datedJanuary 1, 2016, with a face amount of $100,000. The bonds maturein 2020 (5 years). For bonds of similar risk and maturity, themarket yield is 14%. Interest is paid semiannually on June 30 andDecember 31. Required:

1. Determine the price of the bonds at January 1, 2016

. 2. Prepare the journal entry to record the bond issuance byBishop on January 1, 2016.

3. Prepare the journal entry to record interest on June 30,2016, using the straight line method.

4. Prepare the journal entry to record interest on December 31,2016, using the straight line method.