Part C

As an alternative, you are contemplating to incorporate and issue a bond to raise the capital instead of borrowing from the bank.

Required part C

1. Is there an advantage to issuing bonds rather than borrowing money from the bank?
2. Suppose you decide to go this route and you issue a $130,000, 9%, 5-year bonds for $115,375 when the market rate is 12%. The bonds pay interest semi-annually. Prepare an amortization table for the first three payments.
3. The discount is amortized using the straight-line method. Prepare journal entries for the following transactions.
   1. July 1, 2021: entry to record issuing the bonds.
   2. Dec 31, 2021: entry to record payment of interest to bondholders.
   3. Dec 31, 2021: entry to record amortization of discount.