Bringham Company issues bonds with a par value of $600,000 on their stated issue

Question

Bringham Company issues bonds with a par value of $600,000 on their stated issue date. The bonds mature in 10 years and pay 6% annual interest in semiannual payments. On the issue date, the annual market rate for the bonds is 8%·(Table BI, Table B2 Table B3. and Table B.4) (Use appropriate factor(s) from the tables provided.) 1. What is the amount of each semiannual interest payment for these bonds? 2. How many semiannual interest payments will be made on these bonds over their life? 3. Use the interest rates given to select whether the bonds are issued at par, at a discount, or at a premium 4. Compute the price of the bonds as of their issue date 5. Prepare the journal entry to record the bonds' issuance. Complete this question by entering your answers in the tabs below Req 1 to 3Req 4 Req 5 What is the amount of each semiannual interest payment for these bonds? How many semiannual interest payments will be made on these bonds over their life? Use the interest rates given to select whether the bonds are issued at par, at a discount, or at a premium Semiannual Rate Semiannual cash interest payment Par (maturity) value Number of payments Whether the bonds are issued at par, at a discount or at a premium?

Explanation / Answer

Calculate following :

4)

Journal entry :

par (maturity) value Semiannual rate Semiannual cash interest payment 600000 * 3% = $18000 Number of payment 20 Whether the bonds are issued at par, at discount or at a premium Discount

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