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Question - Kellyco Inc. wants to expand its production space and need to build a new production building and buy new production equipment. The project will cost approximately $25,000,000. The company wants to issue a bond to obtain the funds needed. Their Investment Banker has recommended that the bonds should have a 10% stated interest (coupon) rate and be issued for a 20-year term. Kellyco issued $25,000,000 worth of bonds on 1/1/21. Interest is paid annually and is amortized using the straight-line method.

Required -

A. Assume the bonds sell at 93, make the required entries on 1/1/21 and 12/31/21.

B. Assume the bonds sell at 103, make the required entries on 1/1/21 and 12/31/21.

Reference no: EM133136315

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