ASSIGNMENT

BAC 201: Accounting for liabilities and equities

ABC corporation issued to XYZ corporation a Sh60,000, 12% (interest paid semi annually on June 30 and December 31), a 5-year bond dated and sold on January 1, 2015. Assumptions: case A – sold at 103; case B – sold at 97.

Required:

For each case  prepare journal entries to record;

• Issuance of the bond    ( 5 Marks)
• First interest payment ( Assume  straight line method of interest amortization) 
• What are the advantages of leasing a plant asset over purchasing it? (5 Marks)

(5 Marks)