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Arwa Software Ltd. has successfully developed a new spreadsheet program. To produce and market the program, the company needs additional financing. On January 1, 2017,
Arwa Software Ltd. has successfully developed a new spreadsheet program. To produce and market the program, the company needs additional financing. On January 1, 2017, Arwa borrowed money as follows. 1. It issued NT$1 million, 10%, 10-year bonds at face value. Interest is payable annually on January 1. 2. It also issued a NT$400,000, 6%, 15-year mortgage payable. The terms provide for annual installment payments of NT$41,185 on December 31. Instructions 1. For the 10-year, 10% bonds: (a) Journalize the issuance of the bonds on January 1, 2017. (b) Prepare the journal entries for interest expense in 2017. (c) Prepare the entry for the redemption of the bonds at 101 on January 1, 2020, after paying the interest due on this date. 2. For the mortgage payable: Prepare the entry for the issuance of the note on January 1, 2017
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