P$10-7$

L$010-4$

Recording and Reporting a Bond Issued at a Discount $($with Discount Account$)([$

Claire Corporation is planning to issue bonds with a face value of $$100,000$ and a coupon rate of $8$ percent. The bonds mature in two

years and pay interest quarterly every March $31.$ June $30.$ September $30.$ and December $31.$ All of the bonds were sold on January $1$ of

this year. Claire uses the effective$-$interest amortization method and also uses a discount account. Assume an annual market rate of

interest of $12$ percent.

Required:

Provide the journal entry to record the issuance of the bonds.

Provide the journal entry to record the interest payment on March $31.$ June $30.$ September $30,$ and December $31$ of this year.

What bonds payable amount will Claire report on this year's December $31$ balance sheet?