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Can-Ed University, which is owned by a group of Canadian universities and colleges, issued bonds to...

Can-Ed University, which is owned by a group of Canadian universities and colleges, issued bonds to finance the construction of an overseas campus in China. Can-Ed issued 6% 20-year bonds with a face value of $100 million. The bonds will pay interest semi-annually.

Required:

a.) Calculate the amount of cash Can-Ed will receive if the bonds are sold at a yield rate of:

i.) 6% (issued at par)

ii.) 6.5% (issued at 94.448)

iii.) 5.5% (issued at 106.02)

b.) Prepare the journal entry Can-Ed would record at the time of the issuance of the bonds under each of the alternative yields. Also prepare the journal entries to record the interest expense for the first two periods under each alternative.

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Answer #1

8000 w) Ash ecaived.cbon d soldat a Yeildyahz 。(. 5sy. (imoed al-10607 )Dat a 支100 ooooo Bonds patablk intrest expense Cos 3o0booo 匀。 s enpense Cas est pai d) Casn erxpense 炙30todoo Cash Ois tsue o bonds &1 intresepenses ($ 30キ2000 3000000 Cas issue of- bon d Ca sh Premium on issue of-bon ds Ponds pota aal6ooO 똑89000 Cos vecovTn tves- enpense 3) cash Cro vecovd Heintad o.i

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