
Bonds
Bonds are a form of interest bearing notes payable issued by corporations, universities and governmental agencies. It is a debt instrument generated for the purpose of rising capital of the corporations or governmental agencies.
Bonds issued at discount:
The bonds sell less than the face value amount, due to stated interest rate is lesser than the market interest rate. When the stated interest rate is lesser than the market interest rate, the bond will sold at discount.
(a) (1)
To prepare: The
(2)
To prepare: The total cost of borrowing for “W” Company.
(b)(1)
Bonds issued at premium:
The bonds sell more than the face value amount, due to stated interest rate is higher than the market interest rate. When the stated interest rate is higher than the market interest rate, the bond will sold at premium.
To prepare: The journal entry to record the sale of these bonds of “W” Company as on January 1, 2019.
(2)
To prepare: The total cost of borrowing for “W” Company.

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Chapter 10 Solutions
Financial Accounting
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