1.
Bonds: Bonds are long-term promissory notes that are represented by a company while borrowing money from investors to raise fund for financing the operations.
Bonds Payable: Bonds payable are referred to long-term debts of the business, issued to various lenders known as bondholders, generally in multiples of $1,000 per bond, to raise fund for financing the operations.
Premium on bonds payable: It occurs when the bonds are issued at a high price than the face value.
Effective-interest amortization method: Effective-interest amortization method it is an amortization model that apportions the amount of bond discount or premium based on the market interest rate.
To prepare:
2. a.
To prepare: Journal entry to record first semiannual interest payment and amortization of bond premium on December 31, 2016.
b.
To prepare: Journal entry to record second interest payment and amortization of bond discount on June 30, 2017.
3.
The amount of total interest expense for 2016.
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Chapter 12 Solutions
EBK FINANCIAL & MANAGERIAL ACCOUNTING
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