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On 1/1/2022Blue issued 2-year, 10%, $10,000 bonds for $10,363. Interest is paid every 6/30 and 12/31. The effective rate at issuance was 8%.
1. Assume that due tochanges in Blues credit risk, the effective rate changed to14% on 6/30/2022. Record journal entries for 6/30/2022.
2. Further assume that due tochanges in the general market rate, the effective rate changed to12% on 12/31/2022. Record journal entries for 12/31/2022
3. What is the effect of the bonds on the 2022pre-tax income?
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