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On January 1, 2020, North Country Co issued 10-year, 7 percent bonds with a face value...

On January 1, 2020, North Country Co issued 10-year, 7 percent bonds with a face value of $1 million. The market rate for bonds of this class at the time of issue was 8%. Interest is payable annually, with the first payment due on December 31, 2020. a. Compute the issue price of the bonds. b. Show the journal entry to record the issuance of the bonds on January 1. c. Show the journal entry to record the first interest payment.

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Expert Solution

a.

Issue Price of the bond = Present Value of Cash Flows to be received till the maturity i.e., Annual Interesr Payments for 10 Years and Maturity value at the en dof 10th year which are discounted at Matket Interest Rate of 8%

b & c

ekkarill92 answered 2 years ago
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