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Bing Corporation issued 20-year, 10% bonds with a face (par) value of $1,000,000 on January 1, 2008. The bonds pay interest semiannually on June 30 and December 31 of each year starting on June 30, 2008 At the time the bonds were issued, the market rate of interest for similar indebtedness was 12%.

1. Determine the price of the bonds at the time they were issued.

2. Assume the bonds were issued at a price of $850,000. Determine the amount of interest expense to be reported on June 30, 2008, December 31, 2008, and June 30, 2009.

3. Determine the book value of the bonds issued in requirement 2 after the interest payment at June 30, 2009.

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M979348

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