Chapter 14, Problem 14.8EX

To determine

Bonds: Bonds are long-term promissory notes that are represented by a company while borrowing money from investors to raise fund for financing the operations.

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.

To prepare:

• Journal entry to record issuance of the bonds for cash at face amount.
• Journal entry to record the payment of interest on the bonds on September 1.
• The redemption of the bonds.