Chapter 14, Problem 14.32E

(a)

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.

Accrued interest

The amount of interest that has already occurred, but not yet the payment is madeis known as accrued interest.

To Determine: The amount of accrued interest that was included in the proceeds received from sale of the bonds.

(b)

To determine

To Prepare: The journal entry to record the issuance of bonds for Corporation BF.