On January 1, 2024, Instaform, Incorporated, issued 12% bonds with a face amount of $65 million, dated January 1. The bonds mature in 2043 (20 years). The market yield for bonds of similar risk and maturity is 14%. Interest is paid semiannually. Required: 1-a. Determine the price of the bonds at January 1, 2024. 1-b. Prepare the journal entry to record their issuance by Instaform. 2-a. Assume the market rate was 11%. Determine the price of the bonds at January 1, 2024. 2-b. Assume the market rate was 11%. 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
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On January 1, 2024, Instaform, Incorporated, issued 12% bonds with a face amount of $65 million, dated January 1.

  • The bonds mature in 2043 (20 years).
  • The market yield for bonds of similar risk and maturity is 14%.
  • Interest is paid semiannually.

Required:

1-a. Determine the price of the bonds at January 1, 2024.

1-b. Prepare the journal entry to record their issuance by Instaform.

2-a. Assume the market rate was 11%. Determine the price of the bonds at January 1, 2024.

2-b. Assume the market rate was 11%. 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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