Chapter 14, Problem 14.29E

(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.

To Prepare: The journal entry to adjust the bonds to their fair value presentation in the December 31, 2016, balance sheet.

(2)

To determine

To Prepare: The journal entry to adjust the bonds to the fair value as on 31^st December 2017.