Question$1.$

Escape to Egypt Travel Inc. issues $$4,000,000$ of five$-$year, $4\%$ bonds dated January $1,2023.$ Interest is payable on January $1$ and July $1$ each year. The proceeds realized from the issue were the $$3,900,000$ sales price less the $$40,000$ fee charged by Escape's investment bank. Escape's year$-$end is December $31.$

Required:

Prepare journal entries to record:

a$.$ The issuance of the bonds.

b$.$ Payment of interest and related amortization on July $1,2023.$

c$.$ Accrual of interest and related amortization on December $31,2023.$

Question$2.$

On May $1,2023,$ Ripley Ltd$.$ purchases a new automobile for $$36,000$ from the dealer who provides the financing. The threeyear, interest$-$free loan is repayable at $$1,000$ per month. The market rate of interest for similar transactions is $0\mathrm{.}5\%$ per month. Required:

Prepare journal entries to record:

a$.$ The purchase of the automobile.

b$.$ The accrual of interest and the loan payment at the end of May $2023.$

On May $1,2023,$ Ripley Ltd$.$ purchases a new automobile for $$36,000$ from the dealer who provides the financing. The threeyear, interest$-$free loan is repayable at $$1,000$ per month. The market rate of interest for similar transactions is $0\mathrm{.}5\%$ per month. Required:

Prepare journal entries to record:

a$.$ The purchase of the automobile.

b$.$ The accrual of interest and the loan payment at the end of May $2023.$