Rapid Tech Corporation issued $2,000,000 of 9 percent bonds on October 1, 2014, at 96. The bonds are dated October 1 and pay interest semi annually. The market interest rate is 10 percent, and Rapid Tech’s fiscal year ends on December 31. Prepare the journal entries to record the issuance of the bonds, the accrual of the interest on December 31,2014, and the first semiannual interest payment on April 1, 2015. Assume the company uses the effective interest method to amortize the bond discount. (Help needed !!!!)
SOLUTION:Par ValueFuture ValuePresent ValueCoupon Rate (9% / 2)Market Rate (10% / 2) $ 2,000,000$ 2,000,000$ 1,920,0004.50%5.00% Coupon Payments = Par Value * Coupon RateCoupon Payments =…
