Universal Foods issued 10% bonds, dated January 1, with a face amount of $150 million on January 1, 2021. The bonds mature on December 31, 2035 (15 years). The market rate of interest for similar issues was 12%. Interest is paid semiannually on June 30 and December 31. Universal uses the straight-line method.
Required:
1. Determine the price of the bonds at January 1, 2021.
2. Prepare the journal entry to record their issuance by Universal Foods on January 1, 2021.
3. Prepare the journal entry to record interest on June 30, 2021.
4. Prepare the journal entry to record interest on December 31, 2028.
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