a)
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.
Effective-interest method of amortization: It is an amortization model that apportions the amount of bond discount or premium based on the market interest rate.
Present Value: The value of today’s amount expected to be paid or received in the future at a compound interest rate is called as present value.
To calculate: The amount of cash proceeds (present value) from the sale of the bonds.
b)
To calculate: The amount of discount to be amortized for the first semiannual interest payment period.
c)
To calculate: The amount of discount to be amortized for the second semiannual interest payment period.
d)
The amount of bond interest expense for first year.
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