Answer:
The bonds were issued at $220,879,628.13
This is lower than the face value to compensate for the lower coupon payment.
cash               220,879,628.13   debit
discount on BP  39,120,371.87   debit
    bonds payable      260,000,000 credit
--to record the issuance of the bonds--
Interest expense	13,252,777.69 debit
Discoun on BP               252,777.69 credit
  cash          13,000,000      credit
--to record the first interest payment--
Interest expense	13,267,944.35 debit
         Discount on BP                267,944.35 credit
  Cash          13,000,000     credit
--to record second interest payment--
Interest expense	13,539,156.67 debit	
 Discount on BP              539,156.67 credit
 cash                   13,000,000.00 credit
--to record Dec 31st, 2025 payment--
Explanation:
To determinate the price we will solve for the present value of the coupon payment and maturity at the market rate of %12
 
 
Coupon payment:
260,000,000 x 10% x 1/2 =13,000,000.000
time 20 years x 2 payment per year	40 
yield to maturity  12% / 2 = 6%
 
 
PV	$195,601,859.3298 
 
  
  
 Maturity   260,000,000.00 
 time   40.00 
 rate  0.06
  
  
 PV   25,277,768.80 
 
PV c	$195,601,859.3298 
PV m  $25,277,768.8042 
Total	$220,879,628.1340 
For the journal entries, we will multiply this current market price of the bonds by the market rate (YTM) the difference between this and the actual cash obligation generate by the bond is the amortization of the discount.
<u>first interest payment </u>
$220,879,628.13 x 6% = 13,252,777.69
less actual cash outlay:  13,000,000
amortization                          252,777.69
<u>second interest payment</u>
($220,879,628.13- $252,777.69) x 6% = 13,267,944.35
less actual cash outlay:                      <u>     13,000,000.00</u>
amortization                                                   267,944.35
December 31st, 2025:
This will be payment 14th
after building the schedule until that date we got: