Stay Fit for Life Inc.issues three series of $10,000,000 ten-year bonds dated January 1,2011 on the issue date.Interest is payable on June 30 and December 31 each year.Series A has a coupon rate of 7%; series B is 8%; and series C is 11 %.The market rate of interest at time of issue is 8%.
Requirement:
a.Prior to making any numerical calculations,comment on whether:
i.Series A will sell at a discount,par,or premium and briefly explain why.
b.Prepare journal entries to record the issuance of:
i.The series A bonds.

Question

Stay Fit for Life Inc.issues three series of $10,000,000 ten-year bonds dated January 1,2011 on the issue date.Interest is payable on June 30 and December 31 each year.Series A has a coupon rate of 7%; series B is 8%; and series C is 11 %.The market rate of interest at time of issue is 8%.
Requirement:
a.Prior to making any numerical calculations,comment on whether:
i.Series A will sell at a discount,par,or premium and briefly explain why.
  b.Prepare journal entries to record the issuance of:
i.The series A bonds.

Quizplus · Accepted Answer

The Answer of Stay Fit for Life Inc.issues three series of $10,000,000 ten-year bonds dated January 1,2011 on the issue date.Interest is payable on June 30 and December 31 each year.Series A has a coupon rate of 7%; series B is 8%; and series C is 11 %.The market rate of interest at time of issue is 8%.
Requirement:
a.Prior to making any numerical calculations,comment on whether:
i.Series A will sell at a discount,par,or premium and briefly explain why.
  b.Prepare journal entries to record the issuance of:
i.The series A bonds.