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Chapter 9 In-Class Activity
Coffee International is planning to expand their current operations and issues $500,000 par value 8%
bonds on January 1, 2019. The bonds mature in 10 years with interest payments paid out semiannually.
Assume that the market rate is 8%
1. What type of bond is this?
2. Prepare the journal entry for the issuance of the bond.
3. Prepare the journal entry for the first semiannual interest payment.
4. Prepare the journal entry to account for the principal repayment at the maturity date,
assuming the final interest payment has been made.
Coffee International is planning to expand their current operations and issues $500,000 par value 8%
bonds for $478,000 on April 1, 2017. The bonds mature in 10 years with interest payments paid out
semiannually.
1. What type of bond is this? Is the market interest rate higher or lower than the stated rate?
2. Prepare the journal entry for the issuance of the bond.
3. Prepare the journal entry for the first semiannual interest payment.
4. Prepare the journal entry to account for the principal repayment at the maturity date
assuming the final interest payment has been made.
Coffee International is planning to expand their current operations and issues $500,000 par value 8%
bonds for $515,000 on April 1, 2017. The bonds mature in 10 years with interest payments paid out
semiannually.
1. What type of bond is this? Is the market interest rate higher or lower than the stated rate?
2. Prepare the journal entry for the issuance of the bond.
3. Prepare the journal entry for the first semiannual interest payment.
4. Prepare the journal entry to account for the principal repayment at the maturity date
assuming the final interest payment has been made.
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