Use the balance sheet equation to analyze the financial statement effects of the following transactions involving long-term bonds. Assume semiannual compounding. Set up separate columns as necessary and use a separate cash column.

a. Issue $20,000,000 of five-year bonds carrying a coupon interest rate of 8%, payable semiannually. The market rate of interest at the time of issuance for similar bonds was 12%.

b. Record interest paid after the first six months.

c. Record interest due and paid at the end of the first year.

d. Record interest due and paid during each six-month period during the second year.

e. How much cash will be paid at the end of the fifth year?

f. Show the effects of the bond repayment on the financial statements at the end of the fifth year.

g. Discuss why these bonds were issued and recorded at a premium or discount.