On September 1, 2021, Bear Corporation issued $ 1,000,000,6%, 10-year bonds. Interest is payable annually...
70.2K
Verified Solution
Link Copied!
Question
Accounting
On September 1, 2021, Bear Corporation issued $ 1,000,000,6%, 10-year bonds. Interest is payable annually with the first payment due on September 1, 2022 Instructions a) For each of the following market rate assumptions, identify whether Bear would issue the bonds at face value, at a discount, or at a premium: (1) 5%, (2) 6%, and (3) 7%. (1) Market rate of interest of 5% is lower than the contractual rate = (2) Market rate of interest of 6% is equal to the contractual rate = . > (3) Market rate of interest of 7% is higher than the contractual rate b) Provide the appropriate journal entry on September 1, 2021 to record the issuance of the bonds if the market rate of interest is 7%. Round your answer to the nearest dollar. (Type in the account names.) Sep. 1 Calculation with PV tables: (factors use 5 decimals) 1 PV of the maturity value = $ Sep. 1 Calculation with PV tables: (factors use 5 decimals) 1. PV of the maturity value = $ = $ 2. PV of annuity payments = $1 NM:=1,000,000 x 0.06 x = $
Answer & Explanation
Solved by verified expert
Get Answers to Unlimited Questions
Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!
Membership Benefits:
Unlimited Question Access with detailed Answers
Zin AI - 3 Million Words
10 Dall-E 3 Images
20 Plot Generations
Conversation with Dialogue Memory
No Ads, Ever!
Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
