Question: On January 1, 2012, Twister Enterprises, a manufacturer of a variety of transportable spin rides, issues $500,000 of 7% bonds, due in 20 years, with interest payable semiannually on June 30 and December 31 each year.
Required: 1. If the market interest rate is 7%, the bonds will issue at $500,000. Record the bond issue on January 1, 2012, and the first two semiannual interest payments on June 30, 2012, and December 31, 2012.
2. If the market interest rate is 8%, the bonds will issue at $450,518. Record the bond issue on January 1, 2012, and the first two semiannual interest payments on June 30, 2012, and December 31, 2012.
3. If the market interest rate is 6%, the bonds will issue at $557,787. Record the bond issue on January 1, 2012, and the first two semiannual interest payments on June 30, 2012, and December 31, 2012.