The Aerial Aircraft Company has issued $6\%$ convertible bonds that mature October $1,2029.$ Suppose the bonds are issued October $1,2021,$ and pay interest each April $1$ and October $1.$

$($Click the icon to view the bond data.$)$

Read the requirements.

Requirement $1.$ Assume the bonds are issued at a price of $92\mathrm{.}9.$ Using the straight$-$line method of amortization for bond discount:

a$.$ Calculate interest expense on bonds payable for each semiannual interest payment period. Use two decimal places. $($Round intermediary and final calculations to the nearest cent.$)$

The total interest expense each interest period if the bonds are issued at $92\mathrm{.}9$ is

Requirements

Assume the bonds are issued at a price of $92\mathrm{.}9.$ Using the straight$-$line method to amortize the bond discount:

a$.$ Calculate the company's interest expense on bonds payable for each semiannual interest payment period. Use two decimal places.

b$.$ Calculate the amount of accrued interest payable on the company's December $31,2021,$ financial statements.

c$.$ Prepare the journal entry required as of December $31,2021,$ to accrue interest on the bonds payable.

Use Excel to build an amortization table through October $1,2023.$ Use Excel to obtain the issue price. Use the effective$-$interest method of amortization. Round to the nearest dollar.

Using the amortization table, record the following transactions:

a$.$ The issuance of the bonds on October $1,2021.$

b$.$ The accrual of interest and amortization of the bond discount on December $31,2021.$

c$.$ The payment of interest and amortization of the bond discount on April $1,2022.$

d$.$ The conversion of one $-$ quarter of the bonds payable into stock on October $2,2023.$ For the stock, transfer the bond carrying value into the Common Stock account. There is no Additional Paid$-$in Capital account.

e$.$ The retirement of three$-$quarters of the bonds payable on October $2,2023.$ The purchase price of the bonds is based on their call price of $101.$