Chapter 14, Problem 9BPSB

To determine

Introduction:

A bond refers to a security usually used for a debt investment under which an investor finances money to an entity for a specific period of time at a fixed interest rate. Projects that demands huge amount of funds are usually financed from bond issuance.

To calculate:

1. The total bond interest expense over the bond’s life.

2. An effective interest amortization for the bond’s life

3. The journal entries to record the first two interest payments.

4. The present value of the remaining cash flows for these bonds, using the market rate at issuance.