Boyle Technologies Ltd. commercialized the use of charge-couple-device (CCD), which forms the basis of imaging devices in digital cameras, bar code readers, and satellite surveillance technology. To finance the commercial manufacturing of CCD necessary to meet the increasing demand, the company decided to issue bonds. On October 1, it issued seven-year, semi-annual bonds with a contract rate of 15% and an effective interest rate of 15.36%. The discount on the bonds was $3 million, and Boyle Technologies realized proceeds from the issuance of the bonds in the amount of $197 million. Interest payments are made semi-annually on March 31 and September 30.

Required

a. Determine the face value of the bonds and prepare the journal entry to record the bonds’ sale on October 1.

b. Provide the journal entry to record the interest expense for December 31 of the first year. What amount will be reported for the bond liability on the company’s statement of financial position at December 31 of the first year?