On January 1, 2011, NFB Visual Aids issued $800,000 of its 20-year, 8% bonds. The bonds were priced to yield 10%. Interest is payable semiannually on June 30 and December 31. NFB Visual Aids records interest expense at the effective rate and elected the option to report these bonds at their fair value. On December 31, 2011, the fair value of the bonds was $668,000 as determined by their market value in the over-the-counter market. Required: 1Determine the price of the bonds at January 1, 2011, and prepare the journal entry to record their issuance

FINANCIAL ACCOUNTING
10th Edition
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Author:Libby
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Chapter1: Financial Statements And Business Decisions
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On January 1, 2011, NFB Visual Aids issued $800,000 of its 20-year, 8% bonds. The bonds were priced to yield 10%. Interest is payable semiannually on June 30 and December 31. NFB Visual Aids records interest expense at the effective rate and elected the option to report these bonds at their fair value. On December 31, 2011, the fair value of the bonds was $668,000 as determined by their market value in the over-the-counter market. Required: 1Determine the price of the bonds at January 1, 2011, and prepare the journal entry to record their issuance

 

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