PA2. LO 13.1 On July 1, Somerset Inc. issued $200,000 of 10%, 10-year bonds when the market rate was 12%.The bonds paid interest semi-annually. Assuming the bonds sold at 58.55, what was the selling price of thebonds? Explain why the cash received from selling this bond is different from the $200,000 face value of thebond.For your extra credit please address the following items:1.) Prepare the journal entry for issuance on July 1.2.) Prepare the journal entry to record the first interest payment and amortization. Use December 31as your date for this entry. Show your work.3.) What is the bond's carrying value at December 31. Show your work.

Selling price of bonds is $ 200000 x 58.55% = $117100 Selling price of bonds are different then the…

Answered: PA2. LO 13.1 On July 1, Somerset Inc.…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

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