Problom
On May 1, 2016, Ezzy Corporation issued a 4-year bond worth $445,000 with an interest rate of 8% per annum. Interest is to be paid semi-annually on October 31 and April 30. At the time of the issuance, the market interest rate was 6%. Ezzy Corporation amortizes any premium or discount using the effective interest method.
Calculate the bond issue price and the resulting premium or discount.
Do not enter dollar signs or commas in the input boxes.
Round your answers to the nearest whole number.
For transactions with more than one debit or credit, enter the accounts in alphabetical order.
For bond calculations, use the PV tables in Appendix II of the textbook.
Bond Issue Price: $Answer
Premium or Discount: $Answer
b) Prepare journal entries to record the following bonds payable transactions.
1) Issuance of bonds on May 1, 2016.