On January 1, 2012, Instaform Company issued 10% bonds with a principal amount of 550 million, dated January 1. The bonds mature in 2031 (20 vears). The market vield for bonds of similar risk and maturity is 12%. Interest is paid semiannually. Required: 1. Determine the price of the bonds at Jannary 1. 2012. and prepare the joumal entry to recoed their issuance by Instaform. 2. Assume the market rate was 9%. Determine the price of the bonds at January 1. 2012, and prepare the journal entry to record their issuance by Instaform. 3. Assume Broadoourt Electronics purchased the entire issue in a private placement of the bonds. Using the data in requirement 2, prepare the journal entry to record their purchase by Broadoourt.

Principles of Accounting Volume 1
19th Edition
ISBN:9781947172685
Author:OpenStax
Publisher:OpenStax
Chapter13: Long-term Liabilities
Section: Chapter Questions
Problem 6PA: Aggies Inc. issued bonds with a $500,000 face value, 10% interest rate, and a 4-year term on July 1,...
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On January 1, 2012, Instaform Company issued 10% bonds with a principal amount of 550 million, dated January 1. The bonds mature in 2031 (20 vears). The market vield for bonds of similar risk and maturity is 12%. Interest is paid semiannually. Required: 1. Determine the price of the bonds at Jannary 1. 2012. and prepare the joumal entry to recoed their issuance by Instaform. 2. Assume the market rate was 9%. Determine the price of the bonds at January 1. 2012, and prepare the journal entry to record their issuance by Instaform. 3. Assume Broadoourt Electronics purchased the entire issue in a private placement of the bonds. Using the data in requirement 2, prepare the journal entry to record their purchase by Broadoourt.

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