Answer:
cash 500,000 debit
bonds payable 500,000 credit
Explanation:
as the bond are sold at par the present value of the coupon payment and maturity discounted will give the same value as the face value of the bond:
Proof:
[tex]C \times \frac{1-(1+r)^{-time} }{rate} = PV\\[/tex]
C 15,000.000
time 20
rate 0.03
[tex]15000 \times \frac{1-(1+0.03)^{-20} }{0.03} = PV\\[/tex]
PV $223,162.1229
[tex]\frac{Maturity}{(1 + rate)^{time} } = PV[/tex]
Maturity 500,000.00
time 20.00
rate 0.03
[tex]\frac{500000}{(1 + 0.03)^{20} } = PV[/tex]
PV 276,837.88
PV c $223,162.1229
PV m $276,837.8771
Total $500,000.0000
