On June 30, 2021, Gorgeous Inc. sold $ 1,200,000 (face value) of bonds. The bonds are dated June 30, 2021, pay interest semi-annually on December 31 and June 30, and will mature on June 30, 2024. The following schedule was prepared by the accountant for 2021: Instructions
On the basis of the above information, answer the following questions. (Round your answer to the nearest dollar or percent.)
a) What is the contractual rate of interest for this bond issue?
b) What is the market rate of interest for this bond issue?
c) What was the selling price of the bonds as a percentage of the face value?
d) Prepare the journal entry to record the sale of the bond issue on June 30, 2021.
e) Prepare the journal entry to record the payment of interest and amortization on December 31, 2021.

Question

On June 30, 2021, Gorgeous Inc. sold $ 1,200,000 (face value) of bonds. The bonds are dated June 30, 2021, pay interest semi-annually on December 31 and June 30, and will mature on June 30, 2024. The following schedule was prepared by the accountant for 2021:  Instructions
On the basis of the above information, answer the following questions. (Round your answer to the nearest dollar or percent.) 
a) What is the contractual rate of interest for this bond issue?
b) What is the market rate of interest for this bond issue?
c) What was the selling price of the bonds as a percentage of the face value?
d) Prepare the journal entry to record the sale of the bond issue on June 30, 2021.
e) Prepare the journal entry to record the payment of interest and amortization on December 31, 2021.

Quizplus · Accepted Answer

The Answer of On June 30, 2021, Gorgeous Inc. sold $ 1,200,000 (face value) of bonds. The bonds are dated June 30, 2021, pay interest semi-annually on December 31 and June 30, and will mature on June 30, 2024. The following schedule was prepared by the accountant for 2021:  Instructions
On the basis of the above information, answer the following questions. (Round your answer to the nearest dollar or percent.) 
a) What is the contractual rate of interest for this bond issue?
b) What is the market rate of interest for this bond issue?
c) What was the selling price of the bonds as a percentage of the face value?
d) Prepare the journal entry to record the sale of the bond issue on June 30, 2021.
e) Prepare the journal entry to record the payment of interest and amortization on December 31, 2021.