On January 1, 2018, Tennessee Harvester Corporation issued debenture bonds that pay interest semiannually on June 30 and December 31. Portions of the bond amortization schedule appear below: Payment Cash Payment Effective Interest Increase in Balance Outstanding Balance 7,306,018 1 430,000 438,361 8,361 7,314,379 2 430,000 438,863 8,863 7,323,242 3 430,000 439,395 9,395 7,332,637 4 430,000 439,958 9,958 7,342,595 5 430,000 440,556 10,556 7,353,151 6 430,000 441,189 11,189 7,364,340 ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ 38 430,000 502,207 72,207 8,442,327 39 430,000 506,540 76,540 8,518,867 40 430,000 511,133 81,133 8,600,000 Required: 1. What is the face amount of the bonds

The face value of the bond it's the amount that the issuer has borrowed, it may be traded to a less value than it's face value, in this case it's said that was traded at a discount, or maybe at a premium which si more than its face value.

At the maturity date the carrying value of the bonds equals to face value, in this case the face value it's $8,600,000.

The difference lies on the rate interest accepted by the market, the information indicates that the market requires a higher interest rate to lend the money to the company at this moment.

It the moment of the bond issued the company register:

Debit $7.306.018 Cash

Debit $1.293.982 Discount on Bonds Payable

Credit $8.600.000 Bonds Payable

At the moment of record the interest payment

Debit $438.361 Bond Interest Expense

Credit $8.361 Discount on Bond Payable

Credit $430.000 Cash