Chapter 10, Problem 10.7AP

(a)(1)

To determine

Prepare journal entry to record the issuance of bonds of “K” Company on January 1, 2015.

To determine

(2)

Prepare the journal entry to record the accrued interest expense and premium on amortize bond for “K” Company on December 31, 2015.

(3)

To determine

Prepare the journal entry to record the payment of interest of “J” Company on July 1, 2016.

(4)

To determine

Prepare the journal entry to record the accrued interest expense and discount on amortize bond for Corporation K on December 31, 2016.

(b)

To determine

Prepare the proper long-term liabilities section balance sheet presentation for the liability of bonds payable on 31^st December 2016 of “K” Company.

(c)(1)

To determine

Prepare the interest expenses amount shows in the year 2016 of “K” Company.

(2)

To determine

Ascertain if the bond interest expense reported in the year 2016 is greater than the amount reported, lesser than the amount reported or same amount reported, if the Company used the straight-line method of amortization.

(3)

To determine

Determine the total cost of borrowings over life of the bond.

(4)

To determine

Determine the reported total bond interest expense would be greater or same or less than the interest expense.