a (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.
Discount on bonds payable: It occurs when the bonds are issued at a low price than the face value.
To Prepare:
b(2)
To Prepare: Journal entry to record first interest payment and amortization of discount on bonds.
3.
To Prepare: Journal entry to record second interest payment and amortization of discount on bonds.
(b)
The amount of bond interest expense for first year.
(c)
To Explain: The reason why the company was able to issue the bonds for $17,138,298 rather than $18,500,000.
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Working Papers, Chapters 1-17 for Warren/Reeve/Duchac's Accounting, 26th and Financial Accounting, 14th
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