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Maryland Corporation obtained authorization to issue 30-year bonds with a face value of €15 million. The bonds are dated May 1, 2020, and have a contract rate
of interest of 8 percent. They pay interest on November 1 and May 1. The bonds were issued on July 1, 2020, at 100 plus two months’ accrued interest.
Prepare the necessary journal entries in general journal form on the following.
(1) August 1, 2020, to record the issuance of the bonds. (5 points)
(2) November 1, 2020, to record the first semi-annual interest payment on the bond issue. (5 points)
(3) December 31, 2020, to record interest expense accrued through year-end. (Round to the nearest full number.) (5 points)
(4) May 1, 2021, to record the second semi-annual interest payment. (Round to the nearest full number.) (5 points)
(5) What was the prevailing market rate of interest on the date that the bonds were issued? Explain. (5 points)