Chapter 14, Problem 14.16E

(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. If selling price of the bond is equal to its face value, it is called as par on bond. If selling price of the bond is lesser than the face value, it is known as discount on bond. If selling price of the bond is greater than the face value, it is known as premium on bond.

Amortization Schedule

A schedule that gives the detail about each loan payment and shows the allocation of principal and interest over the life of the note, or bond is called amortization schedule.

To Determine:  The incorrect accounts as a result on 1^st January 1, 2016 before any adjustments.

(2)

To determine

To Prepare: The journal entry to correct the error.

(3)

To determine

To Identify: The steps that would be taken in connection with the error.