Hartford Research issues bonds dated January 1 that pay interest semiannually on June 30 and December 31. The bonds have a $40,000 par value and an annual contract rate of 10%, and they mature in 10 years.
Required:
For each separate situation, (a) determine the bonds’ issue price on January 1 and (b) prepare the journal
entry to record their issuance.
1. The market rate at the date of issuance is 8%.
2. The market rate at the date of issuance is 10%.
3. The market rate at the date of issuance is 12%.
Hartford Research issues bonds dated January 1 that pay interest semiannually on June 30 and December 31. The bonds have a $40,000 par value and an annual contract rate of 10%, and they mature in 10 years.
Required:
For each separate situation, (a) determine the bonds’ issue price on January 1 and (b) prepare the journal
entry to record their issuance.
1. The market rate at the date of issuance is 8%.
2. The market rate at the date of issuance is 10%.
3. The market rate at the date of issuance is 12%.
Related questions
| Hartford Research issues bonds dated January 1, 2015, that pay interest semiannually on June 30 and December 31. The bonds have a $31,000 par value and an annual contract rate of 12%, and they mature in 10 years. (Table B.1, Table B.2, Table B.3, and Table B.4) (Use appropriate factor(s) from the tables provided. Round all table values to 4 decimal places, and use the rounded table values in calculations.) |
| Required: |
| Consider each of the following three separate situations. |
| 1. | The market rate at the date of issuance is 10%. |
| (a) | Complete the below table to determine the bonds' issue price on January 1, 2015. |
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| (b) | Prepare the journal entry to record their issuance. |
| Date | General Journal | Debit | Credit |
| Jan 01, 2015 | Cash | 34,864 | |
| Premium on bonds payable | 3,864 | ||
| Bonds payable | 31,000 |
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| (a) | Complete the below table to determine the bonds' issue price on January 1, 2015. |
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| (b) | Prepare the journal entry to record their issuance. |
Journal Entry Worksheet
· Record the issue of bonds with a par value of $31,000 cash on January 1, 2015. Assume that the market rate of interest at the date of issue is 12%.
| Date | General Journal | Debit | Credit |
| Jan 01, 2015 | Cash | ||
| The market rate at the date of issuance is 14%. | |
| (a) | Complete the below table to determine the bonds' issue price on January 1, 2015. | |||||||||||||||||||||||||||||
| ||||||||||||||||||||||||||||||
| (b) | Prepare the journal entry to record their issuance. |
Journal Entry Worksheet
· Record the issue of bonds with a par value of $31,000 cash on January 1, 2015. Assume that the market rate of interest at the date of issue is 14%.
| Date | General Journal | Debit | Credit |
| Jan 01, 2015 | Cash | ||
| Bonds payable |
