Chapter 9, Problem 8SE

Determining the issue price for bonds (Learning Objective 5) 5-10 min.

Determine whether the following bonds payable will be issued at par. at a premium, or at a discount:

1. a. The market interest rate is 5 percent. Wilson, Corp., issues bonds payable with a stated rate of 61/2 percent.
2. b. Apex, Inc., issued 61/2 percent bonds payable when the market rate was 71/4 percent.
3. c. Huntwood Corporation issued 9 percent bonds when the market interest rate was 9 percent.
4. d. Billings Company issued bonds payable that pay cash interest at the stated rate of 5 percent. At the date of issuance, the market interest rate was 61/4 percent.