Your company issues $3,500,000 bonds at 7% interest with annual interest payments. Bonds have a maturity date in 30 years. At the time of issue, the market rate is 5%. a. Calculate the issue price of the bond. b. Record the journal entry for the issue of the bond Record the journal entry for the first interest payment С. d. How much interest is recorded on the income statement in Year 1? е. Record the journal entry for the final entry at the bond maturity date.
Debenture Valuation
A debenture is a private and long-term debt instrument issued by financial, non-financial institutions, governments, or corporations. A debenture is classified as a type of bond, where the instrument carries a fixed rate of interest, commonly known as the ‘coupon rate.’ Debentures are documented in an indenture, clearly specifying the type of debenture, the rate and method of interest computation, and maturity date.
Note Valuation
It is the process to determine the value or worth of an asset, liability, debt of the company. It can be determined by many processes or techniques. Many factors can impact the valuation of an asset, liability, or the company, like:
A bond is a loan the investors give to the company or a business. The company repays the bond with fixed payments. The bond can be issued at a discount, par, or premium.
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