Determine the price of the bonds at January

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Reference no: EM132871999

Problem - Determining the price of bonds; discount and premium; issuer and investor - On January 1, 2021, Instaform, Inc., issued 12% bonds with a face amount of $60 million, dated January 1. The bonds mature in 2040 (20 years). The market yield for bonds of similar risk and maturity is 14%. Interest is paid semiannually.

Required -

1-a. Determine the price of the bonds at January 1, 2021.

1-b. Prepare the journal entry to record their issuance by Instaform.

2-a. Assume the market rate was 11%. Determine the price of the bonds at January 1, 2021.

2-b. Assume the market rate was 11%. Prepare the journal entry to record their issuance by Instaform.

3. Assume Broadcourt Electronics purchased the entire issue in a private placement of the bonds. Using the data in requirement 2, prepare the journal entry to record the purchase by Broadcourt.

Reference no: EM132871999

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