On November 1, 20x1, Bishop Company issued 10% bonds with a face amount of $20 million. The bonds mature in 10 years. For bonds

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On November 1, 20x1, Bishop Company issued 10% bonds with a face amount of $20 million. The bonds mature in 10 years. For bonds

of similar risk and maturity, the market yield is 12%. Interest is paid semiannually on April 30 and October 31. Bishop is a calendar-year corporation.Required:(1.) Determine the price of the bonds at November 1, 20x1.(2.) Prepare the journal entry to record the bond issuance by Bishop on November 1, 20x1.(3.) Prepare the journal entries (using the effective interest method):a. December 31, 20x1b. April 30, 20x2c. October 31, 20x2

Business

1 answer:

lapo4ka [179] · Answer 1 · 2022-02-23T20:13:26+03:00

Answer:

The issue price of the bonds is $ 17,706,015.76 as contained in the attached

The double entries upon bond issuance are as follows:

Dr Cash $17,706,015.76

Dr Discount on bond $ 2,293,984.24

Cr Bonds payable $20,000,000.00

The journal entries for the interest are found in the attached.

Explanation:

Ultimately, the bond issue at a discount of $ 2,293,984.24

($20,000,000.00-$17,706,015.76)

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