On January 1, 2016, Instaform, Inc., issued 10% bonds with a face amount of $50 million, dated January 1. The bonds mature in 2035 (20 years). The market yield for bonds of similar risk and maturity is 12%. Interest is paid semiannually. Required: 1. Determine the price of the bonds at January 1, 2016, and prepare the journal entry to record their issuance by Instaform. 2. Assume the market rate was 9%. Determine the price of the bonds at January 1, 2016, and prepare the journal entry to record their issuance by Instaform. 3. Assume Broadcourt Electronics purchased the entire issue in a private placement of the bonds. Using the data in requirement 2, prepare the journal entry to record the purchase by Broadcourt.

On January 1, 2016, Instaform, Inc., issued 10% bonds with a face amount of $50 million, dated January 1. The bonds mature in 2035 (20 years). The market yield for bonds of similar risk and maturity is 12%. Interest is paid semiannually. Required: 1. Determine the price of the bonds at January 1, 2016, and prepare the journal entry to record their issuance by Instaform. 2. Assume the market rate was 9%. Determine the price of the bonds at January 1, 2016, and prepare the journal entry to record their issuance by Instaform. 3. Assume Broadcourt Electronics purchased the entire issue in a private placement of the bonds. Using the data in requirement 2, prepare the journal entry to record the purchase by Broadcourt.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

On January 1, 2016, Instaform, Inc., issued 10% bonds with a face amount of $50 million, dated January 1. The
bonds mature in 2035 (20 years). The market yield for bonds of similar risk and maturity is 12%. Interest is paid
semiannually.
Required:
1. Determine the price of the bonds at January 1, 2016, and prepare the journal entry to record their issuance by
Instaform.
2. Assume the market rate was 9%. Determine the price of the bonds at January 1, 2016, and prepare the journal
entry to record their issuance by Instaform.
3. Assume Broadcourt Electronics purchased the entire issue in a private placement of the bonds. Using the data
in requirement 2, prepare the journal entry to record the purchase by Broadcourt.

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