How to prepare the wage entry to record the transaction

Reference no: EM132648484

Question 1: Company Alfa issued bonds with a par value of $ 50 million and a nominal interest rate of 5.25%. The bonds pay interest every six months on January 1 and July 1. They were issued on July 1, 2019 and on that date had a duration of 20 years. On the issue date, the market interest rate (yield) was 6.50%.

a. Prepare the journal entry to record the issuance of the bonds on July 1, 2019.

b. Prepare the wage entry for July 1, 2020.

c. If, with eight years (16 semesters) remaining for the bonds to expire, the company withdraws them in the amount of $ 48 million, prepare the wage entry to record the transaction.

Reference no: EM132648484

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