On Jan 1, 2017, Goodday Company issued 7%, 10 yr bond payable with a total...
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Accounting
On Jan 1, 2017, Goodday Company issued 7%, 10 yr bond payable with a total face value of 1,000,000. The bonds pay interest on Jan 1 and July 1. Goodday amortizes bond discount and premium by the effective interest method. The market interest rate was 8% when Goodday issued the bonds. Gooddays financial year ends on Dec 31. Assume Goodday does not record accrued bond interest each month, but instead (i) records bond interest payment on payment date and (ii) records adjusting entries for accrued bond interest only at the end of a financial year.
1. What is the bond price at issuance ? (What is the present value formula for this?)
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