Stay Fit for Life Inc.issues three series of $10,000,000 ten-year bonds dated January 1,2017 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%.
Required:
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.
ii.Series B will sell at a discount,par,or premium and briefly explain why.
iii.Series C 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.
ii.The series B bonds.
iii.The series C bonds.

Question

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The Answer of Stay Fit for Life Inc.issues three series of $10,000,000 ten-year bonds dated January 1,2017 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%.
Required:
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.
ii.Series B will sell at a discount,par,or premium and briefly explain why.
iii.Series C 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.
ii.The series B bonds.
iii.The series C bonds.