Blue Mountain Power Company obtained authorization to issue 20-year bonds with a face value of $10 milion. The bonds are dated May 1,2002, and have a contract rate of interest of 10%.They pay interest on November 1 and May 1. The nonds were issued on August 1 2002,at 100 plus three months' accrued interest.
Instructions
Prepare the necessary journal enties in general journal form on:
a. August 1,2002, to record the issuance of the bonds.
b. November 1, 2002,to record the first semiannual interest through year-end. (Round to the nearest dollar.)
c. may 1,2003, to record the second semiannual interest payment. (Round to the nearest dollar)
d. What was the prevailing market rate of intereston the date that the bonds were issued? Explain
Instructions
Prepare the necessary journal enties in general journal form on:
a. August 1,2002, to record the issuance of the bonds.
b. November 1, 2002,to record the first semiannual interest through year-end. (Round to the nearest dollar.)
c. may 1,2003, to record the second semiannual interest payment. (Round to the nearest dollar)
d. What was the prevailing market rate of intereston the date that the bonds were issued? Explain
