(Answered) The three typical accounting events associated with

Accounting

The three typical accounting events associated with borrowing money through a bond issue are:

1. Exchanging the bonds for cash on the day of issue.
2. Making cash payments for interest expense and recording amortization when applicable.
3. Repaying the principal at maturity.

Required:

a. Assuming the bonds are issued at face value, show the effect of each of the three events on the financial statements, using a horizontal statements model like the following one. Use + for increase, - for decrease, and NA for not affected.

1254_264-B-A-L (2942).png

b. Repeat the requirements in Requirement a, but assume instead that the bonds are issued at a discount.
c. Repeat the requirements in Requirement a, but assume instead that the bonds are issued at a premium.

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