Question

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i More Info - X 1. Ten-year bonds payable with face value of $87,000 and stated interest rate of 14%, paid semiannually. The market rate of interest is 14% at issuance. The present value of the bonds at issuance is $87,000 2. Same bonds payable as in assumption 1, but the market interest rate is 16 %. The present value of the bonds at issuance is $78,497 3. Same bonds payable as in assumption 1, but the market interest rate is 10 %. The present value of the bonds at issuance is $108,693. Print Done

Answer 1

assumption 1| date account titles and explanation debit credit $ 87,000 cash bonds payable $ 87,000 date account titles and explanation debit credit $ 12,180 interest expense cash $ 12,180 assumption 2] date account titles and explanation | debit credit cash discount on bonds payable bonds payable $ 78,497 $ 8,503 $ 87,000 date account titles and explanation debit credit $ 12,560 interest expense discount on bonds payable cash $ 380 $ 12,180

assumption 3 date account titles and explanation debit credit $ 108,693 cash bonds payable premium on bonds payable $ 87,000 $ 21,693 date account titles and explanation debit credit interest expense premium on bonds payable cash $ 10,869 $ 1,311 $ 12,180

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