question 1 On January 1, 2015, Ahmed Company sold SR 400,000 in long term bonds for SR 351,040 The bonds will mature in 5 years and have a stated interest rate of 16 and a yield rate of 20 The bonds pay interest semiannually on July 1 and January 1of each year The bonds are to be accounted for under the effective interest method Instructions (a) Prepare a bond amortization table for this problem to indicate the amount of interest expense and discount amortization at each period Include only the first two years Make sure all columns and rows are properly labeled (Round to the nearest dollar ) (b) Prepare the journal entry for the issuance of the bonds on January 1, 2015 (c) Assuming that interest and discount amortization are recorded each period, prepare the adjusting entry to be made on December 31, 2015 (d) Prepare all journal entries needed for the year 2016 (e) Assuming that Ahmed Company decide to buy back its bond in January 5, 2017, prepare the journal entry if you know that the Company paid SR 360,445 Question Two Answer the following questions 1 Identify various types of bond issues 2 Describe the accounting valuation for bonds at date of issuance 3 Indicate how to present and analyze non current liabilities

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question 1 On January 1, 2015, Ahmed Company sold SR 400,000 in long-term bonds for SR 351,040. The bonds will mature in 5 years and

question 1

On January 1, 2015, Ahmed Company sold SR 400,000 in long-term bonds for SR 351,040. The bonds will mature in 5 years and have a stated interest rate of 16% and a yield rate of 20%. The bonds pay interest semiannually on July 1 and January 1of each year. The bonds are to be accounted for under the effective- interest method.

Instructions:

(a) Prepare a bond amortization table for this problem to indicate the amount of interest expense and discount amortization at each period. Include only the first two years. Make sure all columns and rows are properly labeled. (Round to the nearest dollar.)

(b) Prepare the journal entry for the issuance of the bonds on January 1, 2015
(c) Assuming that interest and discount amortization are recorded each period, prepare the adjusting entry to be made on December 31, 2015.
(d) Prepare all journal entries needed for the year 2016.

(e) Assuming that Ahmed Company decide to buy back its bond in January 5, 2017, prepare the journal entry if you know that the Company paid SR 360,445

Question Two:

Answer the following questions: 1. Identify various types of bond issues.

2. Describe the accounting valuation for bonds at date of issuance

3. Indicate how to present and analyze non-current liabilities