Reference no: EM133178725
Question 1 - A company issued 9.2%, 10-year bonds with a par value of $100,000. Interest is paid semiannually. The market interest rate on the issue date was 10%, and the issuer received $95,016 cash for the bonds. On the first semiannual interest date, what amount of cash should be paid to the holders of these bonds for interest?
Question 2 - A company paid $500,000 for 12% bonds with a par value of $500,000. The bonds pay 6% interest semiannually on September 1 and March 1. The company intends to hold the bonds until they mature. Prepare the journal entries for the following dates and transactions related to this bond acquisition.
(1) Bonds purchased on September 1, 2009.
(2) Year-end adjusting entry, December 31, 2009.
(3) Receipt of semiannual interest March 1, 2010.
(4) Redemption of the bonds at maturity on August 31, 2019.
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