II. On November 1, 20x1, Bush Company issued 10% bonds with a face amount of $20...

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Accounting

II.     On November 1, 20x1, Bush Companyissued 10% bonds with a face amount of $20 million. The bondsmature in 10 years. For bonds of similar risk and maturity, themarket yield is 12%. Interest is paid semiannually on April 30 andOctober 31. Bush is a calendar-year corporation.

Required:
(1.)Determine the price of the bonds at November 1, 20x1.
(2.)Prepare the journal entry to record the bond issuance byBush on November 1, 20x1.
(3.)Prepare the journal entries (using the effective interestmethod):
a.    December 31, 20x1
b.    April 30, 20x2
c.    October 31, 20x2
           *Assumeno reversing entry is recorded on January 1, 20x2.
(4.) What would be the journal entry if all bonds are retired at103 on May 1, 20x3 right after the third payment.

Please all 4 questions, I think I have the price right but wouldlike to make sure my answers are correct before turning it in,thank you

Answer & Explanation Solved by verified expert

4.5 Ratings (887 Votes)

Answer 1 Face Valuea 20000000 Annual coupon rateb 1000 Semi annual coupon ratec 500 Semi annual couponac 1000000 Time to Maturity In years 10 Semiannual period to Maturity 20 Annual Market Rate 1200 Semi annual coupon ratec 600 Proceeds from See Answer

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