Stowers Research issues bonds dated Jan 1, 2011, that pay interest semiannually on June 30 and December 31. The bonds have a $20,000 par value and an annual contract rate of 10%, and they mature in 10 years.
For each of the following three separate situations, (a) determine the bonds issue price on Jan 1, 2011, and (b) prepare the journal entry to record their issuance.
1.) the market rate at the date of issuance is 8%
2.) the market rate at the date of issuance is 10%
3.) the market rate at the date of issuance is 12%