Answer:
The description for problem is listed throughout the section there on the explanations.
Explanation:
(A)...
(1) Prepare your entry in the report to document the bonds issuance.
To track or record bond issues, debit card wallet, debit discount, including credit bond liable as seen below:
Date Account title Debit Credit
1st Jan Cash $9594415 -
Bond payable discount $405585
Payable bond $10000000
(2) Arrange the entry to report the first half yearly interest payment
For report semi-annual interest charges, departmental interest cost, credit discounts on bonds payable as well as credit cash as can be seen here:
Date Account title Debit Credit
30th June Interest expense $390559 -
Bond payable discount - $40559
Cash (10000000×3.5%) $350000
(3) Arrange the entry to report the Second half yearly interest payment
For report semi-annual interest charges, departmental interest cost, credit discounts on bonds payable as well as credit cash as can be seen here:
Date Account title Debit Credit
31st Dec Interest expense $390559 -
Bond payable discount - $40559
Cash $350000
(B)...
Evaluate the sum of first year bond interest.
Particulars Amounts
Interest expense (350000+350000) $700,000
Amortized discount (40559+40559) $81,117
For the first year, Interest expense $781,117
(C)...
The corporation sold the bond for $9,594,415 with a maximum interest of $10,000,000. That would be the $405,585 bond is sold cheaply. The debt are heavily discounted because bond market value is greater than that of the coupon price mostly on debt.
