Question

Water Way Company is considering raising additional capital for further expansion. The company wants to finance a new business venture into guided trips down the Amazon wat in South America Additionally the company wants to add another building on their land to offer more services for local customers Click the loon to viewing the financing information) Read the requirements Requirement 1. We the bonds c e value, a premium, or a discount? de rest o nations r duran nearest whole or Records, the credit explanations Water Way's bonds will be issued because Requirement 2. Record the following transactions include dates and round to the otros) a. Cash received from the bond issue Accounts Debit Requirements Credit with bond e face value, a premium or a discount? Record the fooing transactions includes and round to the r o om Car d rom the bond Cashelved from the mortgage payable Semanal bond Welpen 2000 Antreprenord using the na tion method Payment on the more able to 2020 Calculate the worst expensiumed in 2020 b. Cash received from the mortgage payable Done to Choose from any rere any number in the input fields and then continue to the next

Answer 1

Water way's bonds will be issued at face value because the market interest rate and bond's interest rate are equal. .
Date	Account title and explanation	Debit	Credit
Jan, 2 2020	Cash	799200
	Discount on Bond	800
	Bond Payable		800000
	(To record bond payable)
Jan, 2 2020	Cash	400000
	Mortgage Payable		400000
	(To record mortgage payable)
June, 30	Interest expense	28100
	Discount on bond(800/(4x2))		100
	Cash		28000
	(To record interest expense)
Dec, 31	Interest expense	28100
	Discount on bond		100
	Cash		28000
	(To record interest expense)
Dec, 31	Interest expense(400000x7%)	28000
	Mortgage Payable	20000
	Cash		48000
	(To record mortagage payable)

REQUIREMENT #3

Total interest expense:

Bonds : 56,200 (28100+28100)

Mortgage :28000

Total :84,200