Chapter 10, Problem 10.1ADIE

(a)

To determine

Bonds

Bonds are a kind of interest bearing notes payable, usually issued by companies, universities and governmental organizations. It is a debt instrument used for the purpose of raising fund of the corporations or governmental agencies. If selling price of the bond is equal to its face value, it is called as par on bond. If selling price of the bond is lesser than the face value, it is known as discount on bond. If selling price of the bond is greater than the face value, it is known as premium on bond.

Long-term liabilities

Long-term liabilities are obligations that the company needs to pay after at least one year or more. Long term liabilities are otherwise called as long-term debt. Examples of long-term liabilities are long-term bonds, long-term notes payable mortgage payable and so on.

To prepare: The journal entry to record issuance of bonds for “E” Corporation.

(b)

To determine

To prepare: The long-term liabilities section of the balance sheet of issuance of bonds payable for Incorporation S.