Fill the journal entry to record interest

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Reference no: EM1376709

On 1^st January, Rare Bird ltd. purchased 12 percent bonds dated 1^st January, with a face amount of $20 million. The bonds mature in 2022 (10 years). For bonds similar risk and maturity, the market yield is 10 percent. Interest is paid semiannually on June 30 and 31^st December.

Required.
1) evaluate the price of the bonds at January 1
2) Fill the journal entry to record the bond purchase by Rare Bird on January 1
3) Fill the journal entry to record interest on 30^th June, using the effective interest method.
4) prepare journal entry to record interest on 31^st December, using the efficient interest method.

Reference no: EM1376709

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