The Bradford Company issued 12% bonds, dated January 1, with a face amount of $97 million on January 1, 2021. The bonds mature on December 31, 2030 (10 years). For bonds of similar risk and maturity, the market yield is 14%. Interest is paid semiannually on June 30 and December 31. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD OF $1, and PVAD of $1) Required: 1.Determine the price of the bonds at January 1, 2021. Price of bonds ____________________ 2.to 4. Prepare the journal entries to record their issuance by The Bradford Company on January 1, 2021. Record the bond issuance by the Bradford Company. Record the interest on June 30, 2021 (at the effective rate). Record the interest on December 31, 2021 (at the effective rate).
The Bradford Company issued 12% bonds, dated January 1, with a face amount of $97 million on January 1, 2021. The bonds mature on December 31, 2030 (10 years). For bonds of similar risk and maturity, the market yield is 14%. Interest is paid semiannually on June 30 and December 31. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD OF $1, and PVAD of $1)
Required:
1.Determine the price of the bonds at January 1, 2021.
Price of bonds ____________________
2.to 4. Prepare the
- Record the bond issuance by the Bradford Company.
- Record the interest on June 30, 2021 (at the effective rate).
- Record the interest on December 31, 2021 (at the effective rate).
A bond seems to be a type of financial instrument or debt security that represents a loan made by an investor to an issuer, typically a corporation or government. Bonds are often used as a way for companies and governments to raise capital. They are considered relatively low-risk investments but typically offer lower returns compared to stocks.
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