Problem 1
The New York News Company, on January 1, 2015, issued $4,000,00010-year bonds with a stated (coupon) rate of interest of 8.0%.Interest is payable semi-annually on July 1 and January 1. Thebonds are due January 1,2025. At the time the bonds are sold themarket (effective) rate of interest is 6.0%.
Part A:
Compute the selling price of the bonds and prepare the journalentry recorded by the New York News for January 1, 2015 รขยย the datethe bonds were sold. Please show your work for calculation of thebond price.
Part B:
Assuming the New York News used the straight line method ofamortization for discounts and premiums. Prepare the journal entryto record the payment of interest on July 1, 2015
Part C:
Assuming New York News uses the effective interest method ofamortizing disconnects and premiums and using the same market rateof interest of 6.0 % annually (3.0% for 6 months), please preparethe entry to record the payment of interest on July 1, 2015.