(Answered) Question - on november 1 20x1 bishop company issued 10

Accounting

Question - On November 1, 20x1, Bishop Company issued 10% bonds with a face amount of $20 million. The bonds mature in 10 years. For bonds of similar risk and maturity, the market yield is 12%. Interest is paid semiannually on April 30 and October 31. Bishop is a calendar-year corporation.

Required:

(1) Determine the price of the bonds at November 1, 20x1.

(2) Prepare the journal entry to record the bond issuance by Bishop on November 1, 20x1.

(3) Prepare the journal entries (using the effective interest method):

a. December 31, 20x1

b. April 30, 20x2

c. October 31, 20x2

Assume no reversing entry is recorded on January 1, 20x2.

(4) What would be the journal entry if all bonds are retired at 103 on May 1, 20x3?

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