Q1. On 31/12/2017, Mohammed Salah Co. issued a bond with a face value of 100,000 for three years and the issuance price is 112,656. The bond coupon rate is 14% while the market rate is 9%.

a. Is the bond sold for a discount or a premium?

b. Calculate the discount or premium.

c. Calculate the amortization per year for the bond discount or premium.

d. What is the annual cash payment?

e. What is the bond interest expense at the end of year 1?

f. What is the carrying value at the end of year 1?

g. Record the transaction when the company issued the bond

h. Record the transaction when the company makes the end of year 1 interest payment.

i. What is the carrying value at maturity date (end of year 2)?