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Compute the amount received for the bonds

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Reference no: EM131573462

Assignment: Present Value

District Water Company issued 10-year bonds with a face value of $100,000 and a stated interest rate of 7.0%.

The bonds are dated April 1, 2016, and call for semiannual interest payments on each April 1 and October 1.

Due to market fluctuations, the bonds actually sold to yield 10.0% per year.

INSTRUCTIONS:

1. Compute the amount received for the bonds.
2. Compute the first interest and amortization amounts for the October 1, 2016, payment.
3. Prepare journal entries for the issuance of the bonds and for the first interest payment.
4. Compute the second interest and amortization amounts for the April 1, 2017, payment.

Reference no: EM131573462

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