BONDS ISSUE RELATED PROBLEM

QUESTION :

on january 1 2014 united ten inc "UTI" issues $5,000,000 of bonds with an interest rate of 6%. The term of the bonds is 8 years and interest is paid Semi Annually. The annual market rate of interest is 8%.

Determine the bond proceeds on January 1 2014 $_________________

Was the bond issued at a premium or discount or at par value?___________________

If applicable, what was the amount of the premium or discount?________________

Prepare the Journal Entry, in proper form, to reflect the issuance of the bond on January 1 2014.

DATE_____________

DESCRIPTION_________________

DEBIT____________________________

CREDIT_____________________