Question #1 One of the similarities of bond and equity financing is that both dividends and equity distribution payments are tax deductible.

True or False

Question #2 Payments on an installment note include the accrued interest expense plus a portion of the amount borrowed.

True or False

Question #3 On January 1 of the current year, a company paid $150,000 cash to purchase 7%, 10-year bonds, with a par value of $150,000; interest is paid semiannually on June 30 and December 31. The company intends to hold these bonds until they mature. Prepare the journal entries to record the bond purchase and receipt of the semiannual interest payments on June 30 and December 31 of the current year.