During April 1, 20X7, Sunny Ltd. issued $10 million in 4 year, 8% debenture bonds. Interest is payable semi-annually on May 1 and November 1. When the bonds were issued, yields in the bond market were 8.5%. The company policy is to amortize bond premiums and discounts on a straight line basis. Sunny Ltd. has a January 31 year end.

Required:

1. Prepare all journal entries to record transactions related to the bond from April 1, 20X7 to April, 20X8, in Sunny Ltd.s financial records.
2. Clearly show how this financial information, related to the bond, will be reflected on the Statement of Financial Position and in the Income Statement of Sunny Ltd. at the fiscal year end

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