Garcia Company issues 12.0%, 15-year bonds with a par value of $460,000 and semiannual interest payments. On the issue date, the annual market rate for these bonds is 10.0%, which implies a selling price of 113 1/4.

Garcia Company issues 12.0%, 15-year bonds with a par value of $460,000 and semiannual interest payments. On the issue date, the annual market rate for these bonds is 10.0%, which implies a selling price of 113 1/4.

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter13: Long-term Liabilities

Section: Chapter Questions

Problem 4EA: On January 1, 2018, Wawatosa Inc. issued 5-year bonds with a face value of $200,000 and a stated...

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Garcia Company issues 12.0%, 15-year bonds with a par value of $460,000 and semiannual interest payments. On the issue date, the
annual market rate for these bonds is 10.0%, which implies a selling price of 113 1/4.
Prepare the journal entry for the issuance of these bonds for cash on January 1.

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On January 1, 2018, Wawatosa Inc. issued 5-year bonds with a face value of $200,000 and a stated interest rate of 12% payable semi-annually on July 1 and January 1. The bonds were sold to yield 10%. Assuming the bonds were sold at 107.732, what is the selling price of the bonds? Were they issued at a discount or a premium?
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