Chapter 14, Problem 14.14E

(1)

To determine

Bonds

Bonds are a kind of interest bearing notes payable, usually issued by companies, universities and governmental organizations. It is a debt instrument used for the purpose of raising fund of the corporations or governmental agencies.

Notes payable

Notes Payable is a written promise to pay a certain amount on a future date, with certain percentage of interest. Companies use to issue notes payable to meet short-term financing needs.

To Prepare: The journal entry to record the sale of both issues to underwriters, assume there is no accrued interest and no issue costs for shares.

(2)

To determine

To Prepare: The journal entry to record the first semiannual interest payment for both the issue.