Answer:
Dr Cash $270,000
Dr discount on bonds payable($300,000-$270,000) $30,000
Cr bonds payable $300,000
Explanation:
First and foremost we need to determine the yield to maturity on this bond using rate formula in excel:
=rate(nper,pmt,-pv,fv)
nper is the number of interest payments the bond would make,which is 2
years multiplied 2 since interest is paid twice i.e nper is 4
pmt is the semiannual interest payable =$300,000*6%*6/12=$9000
pv is the current price of $270,000
fv is the face value of $300,000
=rate(4,9000,-270000,300000)=5.88%
5.88% is the semiannual rate
5.88%*2=11.76% is the annual yield
The annual yield is made use of in the attached amortization schedule.
