In: Accounting
The Bradford Company issued 14% bonds, dated January 1, with a
face amount of $89 million on January 1, 2018. The bonds mature on
December 31, 2027 (10 years). For bonds of similar risk and
maturity, the market yield is 16%. Interest is paid semiannually on
June 30 and December 31. (FV of $1, PV of $1, FVA of $1, PVA of $1,
FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from
the tables provided.)
Required:
1. Determine the price of the bonds at January 1,
2018.
2. to 4. Prepare the journal entry to record their
issuance by The Bradford Company on January 1, 2018, interest on
June 30, 2018 and interest on December 31, 2018 (at the effective
rate).