Question - The Gorman group issued 900000 of 13% bonds on June 30 2006. The bonds were dated on June 30 and mature on June 30 2026 20 years. The market yield for bonds of similar risk and matuirty is 12% interest is paid semiannually on Dec 31 and June 30.
1. Determine price of the bonds at June 30 2006.
Interest=?
Principal=?
Present value of the bonds=?
2. Prepare the journal entry to record their issuance by the Gorman group on June 30 2006
3. Prepare the journal entry to record interest on Dec 31 2006 at the effective rate.
4. Prepare the journal entry to record on June 30 2007 at the effective rate.