1. A ____________ is its issuers written promise to pay the par value of the bond with interest.
2. The legal contract between the bond issuer and the bondholder is called the bond ____________________.
3. The _________ value of a bond, also called its ____________ value, is the amount the issuer must pay back on the bonds maturity date. The issuer will ALWAYS credit the long-term liability account ______________________________ for this amount on the day the bond is issued.
4. The ______________ rate of interest is the rate of interest printed on the bond indenture. It is the annual rate of interest the issuer must pay on the bond until it matures. It can also be called the coupon rate, stated rate, or nominal rate.
5. Interest on bonds is paid __________________________.
6. The formula to calculate interest is _____________________________, principle (par value) X interest (contract rate) X time (one-half of a year).
7. The _________________ rate of interest is the rate that borrowers are willing to pay and lenders are willing to accept for a bond at the bonds risk level. You can think about it as the average rate of interest that bonds are paying in the market.
8. The ______________ price of a bond is based on the relationship between the bonds contract rate of interest and the current market rate of interest on the date the bond is issued. The bond issuer will ALWAYS debit _____________ for this amount on the day the bond is issued.
9. If a bonds contract rate of interest is lower than the market rate of interest on the day the bond is issued, the bond will sell at a ______________________.
10. If a bonds contract rate of interest is higher than the market rate of interest on the day the bond is issued, the bond will sell at a _____________________.
11. The only occasion in which the issue price of a bond will equal the bonds par value is when the bonds contract rate of interest and the market rate of interest are ________________.
12. A bond discount or premium is allocated to interest expense each interest period through a process called _________________________________.
13. Using the straight-line method to amortize any bond discount or premium means that each of the journal entries to record the semi-annual interest payments will be ____________________.
14. Using Professor Zs recommended approach to prepare the journal entry for a bonds first interest payment, the five steps are:

1. Calculate the interest payment amount (Interest = Principle X Rate X Time).
2. Immediately credit ____________ for the calculated interest payment amount.
3. Fill in the account names for the rest of the journal entry. You will always have a debit to Bond Interest Expense. If Discount on B/P was debited in the bond issuance entry, you will have a _____________ to Discount on B/P in this entry. If Premium on B/P was credited in the bond issuance entry, you will have a _____________ to Premium on B/P in this entry.
4. To determine the amount of the credit to Discount on B/P or debit to Premium on B/P, divide the total discount or premium amount by the number of interest payments.
5. To determine the amount of the debit to Bond Interest Expense, __________________.

15. The ____________________________________________ of a bond is the bonds par value minus the unamortized balance in the Discount on Bonds Payable account or plus the unamortized balance in the Premium on Bonds Payable account.