On January 1, 2018, NFB Visual Aids issued $900,000 of its 20-year, 10% bonds. The bonds...

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Accounting

On January 1, 2018, NFB Visual Aids issued $900,000 of its20-year, 10% bonds. The bonds were priced to yield 12%. Interest ispayable semiannually on June 30 and December 31. NFB Visual Aidsrecords interest expense at the effective rate and elected theoption to report these bonds at their fair value. On December 31,2018, the fair value of the bonds was $768,000 as determined bytheir market value in the over-the-counter market. General(risk-free) interest rates did not change during 2021. (FV of $1,PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1)(Use appropriate factor(s) from the tablesprovided.)

Required:
1-a. Determine the price of the bonds atJanuary 1, 2018.
1-b to 4. Prepare the necessary Journalentries.
Record the issuance of bonds. Record the first interest payment.Record the second interest payment.The entry to adjust the bonds totheir fair value for presentation in the December 31, 2018 balancesheet.

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Solution Given data NFB visual Aids issued 900000 of its 20 yeras 10 bonds were priced to yeld 12 The fair value of the bonds was 768000 From the given data we need to find the given requirements Answer 1a See Answer

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On January 1, 2018, NFB Visual Aids issued $900,000 of its20-year, 10% bonds. The bonds were priced to yield 12%. Interest ispayable semiannually on June 30 and December 31. NFB Visual Aidsrecords interest expense at the effective rate and elected theoption to report these bonds at their fair value. On December 31,2018, the fair value of the bonds was $768,000 as determined bytheir market value in the over-the-counter market. General(risk-free) interest rates did not change during 2021. (FV of $1,PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1)(Use appropriate factor(s) from the tablesprovided.)Required:1-a. Determine the price of the bonds atJanuary 1, 2018.1-b to 4. Prepare the necessary Journalentries.Record the issuance of bonds. Record the first interest payment.Record the second interest payment.The entry to adjust the bonds totheir fair value for presentation in the December 31, 2018 balancesheet.