Option 3 possible answers: A. record an accrued liability to recognize the interest expense incurred but not paid from October 1 to December 31. B. not record any expense related to the interest on the loan since it is not due until April 1st of the following year. C. record a cash payment of three months' of interest to reflect interest for the period from October 1 to December 31. D. record an accrued liability of six months' interest from October 1 until April 1st, and as a result, it will pay half of this amount on April 1st with the other half being paid on December 31st.

Required: 1. Identify and analyze the effect of the issuance of the bonds on April 1,2017. How does this entry affect the accounting equation? 2. Identify and analyze the effect of the interest payment on October 1, 2017. How does this entry affect the accounting equation? 3. On December 31 , Brand should 4. Determine the total cash inflows and outflows that occurred on the bonds over the eight-year life