Stowers Research issues bonds dated January 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.
1. The market rate at the date of issuance is 8%
(a) Determine the bonds' issue price on January 1, 2011
(b) Prepare the journal entry to record their issuance.
2. The market rate at the date of issuance is 10%.