Assume that on April 1, 2016?, Pacific?, Corp., issues 7 percent, 10-year bonds payable with...
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Assume that on April 1, 2016?, Pacific?, Corp., issues 7 percent, 10-year bonds payable with a maturity value of $100,000.
The bonds pay interest on March31 and September 30?, and Pacific amortizes any premium or discount by the? straight-line method. Pacific?'s fiscal? year-end is December 31.
1.
If the market interest rate is 6 percent when Pacific?, Corp., issues its? bonds, will the bonds be priced at? par, at a? premium, or at a? discount? Explain.
2.
If the market interest rate is 10 percent when Pacific?, ?Corp., issues its? bonds, will the bonds be priced at? par, at a? premium, or at a? discount? Explain.
3.
Assume that the issue price of the bonds is $106,000. Journalize the following bonds payable transactions? (round amounts to the nearest? dollar):
a.
Issuance of the bonds on April 1, 2016
b.
Payment of interest and amortization of premium on September 30?, 2016
c.
Accrual of interest and amortization of premium on December 31?, 2016
d.
Payment of interest and amortization of premium on March 31?, 2017
hey guys, I have a trouble with the above question, could you please helping me with this one?
Thanks!
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