Answer:
Amount = Maturity/(1+risk rate)⁴
Amount = $100,000/(1+0.12)⁴
Amount = $63,552 (Approx)
Interest payable = $63,552 x 0.12
Interest payable = $7,626 (Approx)
Interest payable (2nd period) = ($63,552+$7,626) x 0.12
Interest payable (2nd period) = $8,541 (Approx)
Explanation:
JOURNAL ENTRY
BOOKS OF (.....)
Date Account title Debit Credit
Cash a/c Dr $63,552
To Bonds payable a/c $63,552
1st-period
Bond Interest a/c Dr $7,626
To Bonds payable a/c $7,626
2nd-period
Bond Interest a/c Dr $8,541
To Bonds payable a/c $8,541
