Question 3

Explain why depreciation expense djustment of the current year's income. (2 marks) 5. Explain the reasons why a company might decide to issue a share dividend rather than cash dividend. (2 marks) Question 3: (10 marks) (Suggested time: 20 minutes) ChuChu Company issues 9%, five-year bonds dated January 1, 2019, with a $160,000 face value for $166,494. The bonds pay interest annually. Their annual market rate is 8% on the issue date. Instructions (a) Prepare the journal entry to record the issuance of bonds on January 1, 2019. (2 marks) (6) Prepare the journal entry to record the first and second interest payment. (Round up to 2 decimals) (3 marks) (c) Compute the total cost of borrowings over the bonds' life. (2 marks) have been paid and recorded until that date. Prepare the journal entry to record the redemption of the bond. (3 marks) SAMSUNG