Notes Payable

Issue a note, accrue interest at year-end, and pay off principal plus interest at maturity.

Bonds Issued at Par

Record bond issuance when coupon rate equals market rate — no discount or premium.

Bonds at Discount — Straight-Line

Market rate exceeds coupon rate. Record discount and amortize using straight-line method.

Bonds at Premium — Straight-Line

Coupon rate exceeds market rate. Record premium and amortize using straight-line method.

Effective Interest Method

More precise amortization — interest expense based on carrying value times market rate each period.

Balance Sheet Presentation

Show bonds payable with unamortized discount/premium and carrying value on the balance sheet.

Early Retirement of Bonds

Retire bonds before maturity — calculate gain or loss and record the retirement journal entry.

Mixed Problems

Multi-step: issue a bond, build a partial amortization table, and retire it early.