Atwater Corporation is building a new, state-of-the-art production and assemsuance of bonds and interest; bly facility for $10,000,000. To finance the facility it is using $2,000,000 it received from prepare installment payments the issuance of shares of common stock, and the balance is being funded from the isschedule and journal entries suance of bonds. The $8,000,000, 11%, 5-year bonds were sold on August 1, 2001. They Pome modsdee note payable Ser. dated August 1, 2001, and pay interest August 1 and February 1. Atwater uses the OB 8./10) straight-line method to amortize bond premium or discount. Assume no interest is accrued on January 31 or July 31.

Atwater also purchased a new piece of equipment to be used in its new facility. The

$550,000 piece of equipment was purchased with a $50,000 down payment and with cash received through the issuance of a $500,000, 8%, 3-year mortgage note payable issued on October 1, 2001. The terms provide for quarterly installment payments of $47,280 on December 31, March 31, June 30, and September 30.

Instructions

(Round all computations to the nearest dollar.)

(a) Prepare all necessary journal entries to record the issuance of the bonds and bond interest expense for 2001, assuming the bonds sold at 101.

(b) Prepare an installment payments schedule for the first five payments of the notes payable.

(c) Prepare all necessary journal entries related to the notes payable for December 31, 2001.

(d) Show balance sheet presentation for these obligations for December 31, 2001. (Hint:

Be sure to distinguish between the current and long-term portions of the note.)