(Answered) Question - bond issued at a discounton january 1 2003

Accounting

Question - Bond Issued at a Discount

On January 1, 2003, Master Corporation issued 100 bonds with a par value of $ 1,000 each. The stated interest rate on the bond is 4% payable annually on December 31 of each year. The market rate is 6%. The bonds will mature 4 years from the date of issue (December 31, 2006).

(a) Compute the issue price of the bonds on January 1, 2003.

(b) Provide the journal entry to record the issuance of the bonds on January 1, 2003.

(d) Show how the bond liability and the related accounts will appear on the Balance Sheet of Master on December 31, 2003.

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