Issue of bond at par: When the coupon rate or contract rate of a bond is equal to the market interest rate, the bond is being issued at par value. If a bond is issued at par, the selling price of the bond will be equal to face value of the bond . Issue of bond at discount: When the coupon rate or contract rate of a bond is lower than the market interest rate, the bond is being issued at discount. The selling price of the bond will be lower than the face value of the bond under issue of bond at discount. Issue of bond at premium: When the coupon rate or contract rate of a bond is higher than the market interest rate, the bond is being issued at premium. If the bond is issued at premium, the selling price of the bond will be higher than the face value of the bond. To determine: Journalize issuance of bond and the first semiannual interest payment under each of the each assumptions.

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Chapter 14, Problem E14B.31E

To determine

Issue of bond at par:

When the coupon rate or contract rate of a bond is equal to the market interest rate, the bond is being issued at par value. If a bond is issued at par, the selling price of the bond will be equal to face value of the bond.

Issue of bond at discount:

When the coupon rate or contract rate of a bond is lower than the market interest rate, the bond is being issued at discount. The selling price of the bond will be lower than the face value of the bond under issue of bond at discount.

Issue of bond at premium:

When the coupon rate or contract rate of a bond is higher than the market interest rate, the bond is being issued at premium. If the bond is issued at premium, the selling price of the bond will be higher than the face value of the bond.

To determine:

Journalize issuance of bond and the first semiannual interest payment under each of the each assumptions.

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