Chapter 15, Problem 15.8E

To determine

Bonds: Bond is a financial instrument which generates the fixed income to the investors within a specified period of time. The income generated on the bonds is known as interest amount.

Redemption of Bonds: The repayment of principle amount of bond at the end bond period or before bond period is called redemption of bonds.

Journalizing: It is the process of recording the transactions of an organization in a chronological order. Based on these journal entries recorded, the amounts are posted to the relevant ledger accounts.

Accounting rules for journal entries:

• To increase balance of the account: Debit assets, expenses, losses and credit all liabilities, capital, revenue and gains.
• To decrease balance of the account: Credit assets, expenses, losses and debit all liabilities, capital, revenue and gains.

To prepare: Journal entries.