Business, 16.09.2021 19:10 TanishaSchollaert1

On January 1, 2018, Essence Communications issued $760,000 of its 10-year, 8% bonds for $665,287. The bonds were priced to yield 10%. Interest is payable semiannually on June 30 and December 31. Essence Communications records interest at the effective rate and elected the option to report these bonds at their fair value. On December 31, 2018, the market interest rate for bonds of similar risk and maturity was 9%. The bonds are not traded on an active exchange. The decrease in the market interest rate was due to a 1% decrease in general (risk-free)interest rates. Required:
a. Using the information provided, estimate the fair value of the bonds at December 31, 2018.
b. Prepare the journal entry to record interest on June 30, 2018.

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On January 1, 2018, Essence Communications issued $760,000 of its 10-year, 8% bonds for $665,287. Th...

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