Bombay Corporation issued 8% bonds on January 1, 2021, with a face value of $700,000, the market yield for bonds of similar risk and maturity was 10%. The bonds mature December 2023 (3 years). Interest is paid semiannually on June 30 and December 31.  Required:  1. Determine the price of the bonds on January 31, 2021.  2. Prepare the journal entry to record their issuance by Bombay on January 1, 2021. (See the below template) 3. Prepare an amortization schedule that shows the effective interest rate each period. 4. Prepare the journal entry to record interest on June 30, 2022. Date Cash Payment Effective Interest Increase in balance. Discount Reduction Outstanding Balan

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Capital Gain

Any capital asset when sold can give the seller a higher or lower price from its purchase price leading to a capital gain or capital loss. The time period of holding an asset is decided based on if it is a long term or short-term capital gain. On that basis, the rate of taxation is decided if it is 20%, 15% or according to the tax brackets. The rate of taxation differs in the case of equity or debt, whether long or short term. The capital gain can be adjusted from capital loss to arrive at a net capital gain. The amount of gains and the exemption has to be reported in the tax return filed in the financial year in which the asset was transferred. The tax return can be filed quarterly, monthly, semi-annually or annually.