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Jester company issues bonds with a part value of $600000 on their started issue date .The...

Jester company issues bonds with a part value of $600000 on their started issue date .The bonds mature in 10 years and pay 6% annual interest in semiannual payments.On the issue date, The annual market rate for bonds is 8%
1. What is the amount of each semiannual interest payment for these bonds?
2. How many semiannual interest payment will be made on these bonds over their life?
3. Use the interest rates given to determine whether the bonds are issues at par ,at a discount or at a premium.
4. Computer the price of the bonds as their issue date.
5. Prepare the journal entry to record the bonds insurance.

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Answer #1
Answer:
1 Semi annual interest payment (600000*6%*1/2) $18,000
2 Number of semi annual payments (10*2) 20
3 Bonds are issued at discount as 6% contract rate is less than 8%.
4 Price of bonds
Cash Flow PV Factor Present Value
Par Value $600,000 0.4564 $273,840
Interest $18,000 13.5903 $244,625
Price of Bonds     $518,465
5 Dr. Cash $518,465
Dr. Discount on Bonds Payable $81,535
Cr. Bonds Payable $600,000
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