Problem: Co issued $750,000 of 4%, 12-year bonds on 10/1/05 plus accrued interest at a time when the market rate of interest was 6%. The bonds have an authorized date of 8/1/05 and pay interest each 2/1 and 8/1. The effective-interest method is used to amortize any discount or premium.
Compute the:
1) semi-annual interest payment
2) issue price of the bond
3) the amount of discount or premium (indicate which one) for which the bond was issued
CLUE must MATCH: Carry value of bonds at 8/1/06 is $630,470