On September 1, 2013, Priora Corporation issued $600,000 of 10-year, 3% bonds at 96. Interest is payable semi-annually on September 1 and March 1. Priora's fiscal year end is February 28.

Instructions

(a) Is the market rate of interest higher or lower than 3%? Explain.

(b) Record the issue of the bonds on September 1, 2013.

(c) Record the accrual of interest on February 28, 2014, assuming the semi-annual amortization amount for this interest period is $1,014.

(d) Identify what amounts, if any, would be reported as a current liability and non-current liability with respect to the bonds and bond interest accounts on February 28, 2014.

(e) Record the payment of interest on March 1, 2014.