Question: Viking Voyager specializes in the design and production of replica Viking boats. On January 1, 2012, the company issues $2,000,000 of 8% bonds, due in 10 years, with interest payable semiannually on June 30 and December 31 each year.
Required: 1. If the market interest rate is 8%, the bonds will issue at $2,000,000. 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 9%, the bonds will issue at $1,869,921. 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 7%, the bonds will issue at $2,142,124. Record the bond issue on January 1, 2012, and the first two semiannual interest payments on June 30, 2012, and December 31, 2012.