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Roland Corp

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Assume that on April 1,2008, Roland Corp. issues 8%, 10-year bonds payable with a maturity value of $400,000. The bonds pay interest on March 31 and September 30, and Roland amortizes any premium and discount by the straight-line method. Roland's fiscal year-end is December 31.;Requirements;1) If the market interest rate is 7 1/2% when Roland issues its bonds, will the bonds be priced at maturity value, at a premium, or at a discount?;2) If the market interest rate is 9% when Roland issues its bonds, will the bonds be priced at maturity, premium, or discount?;3) Assume that the issue price of the bonds is 101. Journalize the following bonds payable transactions;A) Issuance of the bonds on April 1, 2008.;B) Payment of interest and amortization of premium on September 30, 2008.;C)Accrual of interest and amortization of premium on December 31, 2008.;D) Payment of interest and amortization of premium on March 31, 2009.

 

Paper#79591 | Written in 18-Jul-2015

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