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  3. vanguard corporation issued $7,000,000 of 11% bond

Vanguard Corporation issued $7,000,000 of 11% bonds on January 1, 2023, due on January 1,...

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Accounting

Vanguard Corporation issued $7,000,000 of 11% bonds on January 1, 2023, due on January 1, 2031. The interest is to be paid twice a year on January 1 and July 1. The bonds were sold to yield 8% effective annual interest. Grove Corporation closes its books annually on December 31.
Present value of 1 for 16 periods at 4.0%0.53391
Present value of 1 for 16 periods at 5.5%0.42458
Present value of an ordinary annuity for 16 periods at 4.0%11.65230
Present value of an ordinary annuity for 16 periods at 5.5%10.46216
Instructions
(a) Calculate the issuing price of the bonds (show your work).
(b) Prepare the journal entries for the second year (January 1, 2024 - January 1, 2025) using the effective-interest method.
(c) Compute the interest expense to be reported in the income statement for the year ended, December 31, 2024.

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