Cooper Insurance Ltd. issues bonds with a face value of $100 million that mature in 12 years. The bonds carry a 7.4% interest rate and are sold at 116.53 to yield 5.5%. They pay interest semi-annually.

a) Calculate the proceeds on issuance of the bonds, and show the journal entry to record the issuance.

b) Will the carrying value of the liability for these bonds increase over time, or decrease?

c) Show the journal entries to record the first two interest payments on these bonds. Ignore year-end accruals of interest.

Proceeds on Issuance of the Bonds $ Account Titles and Explanation Debit Credit Account Titles and Explanation Debit Credit (To record first interest payment) (To record second interest payment)