Problem:
Stower Research issues bonds dated January 1, 2005, that pay interest semiannually on June 30 and December 31. The bonds have a 20,000 par value, an annual contract rate of 10% , and mature in 10 years.
For each of the following three separate situation, (a) determine the bonds' issue price on January 1, 2005, and (b) prepare the journal entry to record their issuance.
1. Market rate at the date of issuance is 8%.
2. Market rate at the date of issuance is 10%.
3. Market rate at the date of issuance is 12%.