80.2K

Verified Solution

Link Copied!

On January 1, 2023, Bootic Inc. issued $2,688,000 worth of 5% redeemable bonds due in 12 years. At the time of issue, the market interest rate was 4% (interest is due annually). Calculate the discount or premium at which the bonds were issued. The company's year end is December 31. Do not enter dollar signs or commas in the input boxes. Round your answer to the nearest whole number. For bond calculations, use the PV tables at the end of Chapter 7 textbook or use a financial calculator. The bond is issued at a: Premium/Discount: $ A company is issuing $340,000 worth of 5 -year bonds on August 1,2023 , bearing an interest rate of 2%, payable annually. Assume that the current market rate of interest is 7%. a) Will the bonds be issued at a discount or at a premium? b) Calculate the value of the resulting discount or premium. c) Record the journal entry to reflect the sale of bonds and the appropriate discount or premium. Note that the present value factor for the principal is 0.7130 (7\%, 5-years) and that the present value factor for the recurring interest payment is 4.1002 (7%,5-years) Do not enter dollar signs or commas in the input boxes. Round your answers to the nearest whole number. Enter the debit accounts in alphabetical order as applicable. Enter all credit accounts in alphabetical order as applicable

Answer & Explanation Solved by verified expert

See Answer