Problem I: Indicate whether each of the following statements is true (T) or false (F).a._t___An advantage for a company to finance its operations through the issuance of debt rather than through the issuance of stock is the deductibility of interest expense for income tax purposes.b.___t_An advantage for a company to finance its operations through the issuance of stock rather than through the issuance of debt is the deductibility of dividend payments for income tax purposes.c.__f__Secured bonds have specific assets of the issuer (the borrowing company) pledged as collateral on the bonds.d.__t__A bond which can be converted into common stock at the option of the bondholder is referred to as a callable bond.e.__t__A company’s times interest earned ratio being higher this year than it was last year is an indication that the company’s ability to meet its interest payments as they become due has worsened over time.f.___f_When the market interest rate exceeds the face interest rate on a bond, the bond will be issued at a premium.g.__t__When a bond is redeemed early and the amount paid to retire the bond exceeds the bond’s carrying value, a loss will result.h.__t__The account called “Discount on Bond Payable” is an example of a contra-asset account.i.__f__The dollar difference between the “Bond Payable” account balance and the “Discount on Bond Payable” account balance is referred to as the bond’s carrying value.j.__f__An increase in a company’s debt to equity ratio over time is an indication of increased risk to the company’s creditors and investors.k.__t__An investment fund a company uses to set aside money to pay future debts as they become due is called a sinking fund.Problem II: On 1/1/X1, Wolfpack Inc. issues 3-year bonds with a face value of $50,000 and a face (stated) rate of 4% compounded semi-annually. The market interest rate for bonds of similar risk and maturity is 5% compounded semi-annually. Interest is paid semi-annually on June 30 and December 31 beginning on June 30, 20X1. The bonds mature on 12/31/X3.A. What is the issue price of the bonds on 1/1/X1? Note to student: If you have trouble answering this question, go to the last page of this graded assignment where you will be asked a series of questions that, if answered correctly, should lead you to the correct answer.Answer: $___50000______B. Were the bonds issued at face value, at a discount, or at a premium? Answer: _____6700_____C. Using the bond issue price calculated in letter “A” and rounding all calculations to the nearest whole dollar, fill in the remaining missing spaces (gray blocks) in the amortization schedule below using the effective interest method. Some of the spaces are already filled in to serve as checks.E. Assuming a bond is issued at a discount, indicate whether each of the following statements is true (T) or false (F):___t_The carrying value on the issue date is equal to the bond’s issue price.___f_The carrying value increases over time.___t_The carrying value on the maturity date is equal to the bond’s face value.___f_The cash interest payment stays the same over time.___t_Interest expense for increases over time.Problem III: On 1/1/X1, Wolfpack Inc. issues 3-year bonds with a face value of $50,000 and a face (stated) rate of 4% compounded semi-annually for an issue price of $48,623. The market interest rate for bonds of similar risk and maturity is 5% compounded semi-annually. Interest is paid semi-annually on June 30 and December 31 beginning on June 30, 20X1. The bonds mature on 12/31/X3.A. Prepare the journal entries (in proper form) for the dates noted below. Explanations are not needed.DateDebitCredit1/1/X1Interest expense30000cash300006/30/X1Bond issue45000Interest expense4500012/31/X1Bond expense50000Interest expense56000B. Accounting Check √ On a scrap piece of paper, post the above entries to the “Bond Payable” and “Discount on Bonds Payable” T-accounts and compute account balances at 12/31/X1. Does the “Bond Payable” account balance less the “Discount on Bonds Payable” account balance equal the carrying value of the bonds as of 12/31/X1 per your amortization schedule for Problem II? If your answer is not “yes”, please go back and check your work.Problem IV: On January 1, 20X1, Moreno Company issued 4-year bonds with a face value of $400,000 and a face interest rate of 6% compounded semi-annually for an issue price of $429,300. This price results in an effective-interest (market) rate of 4% compounded semi-annually on the bonds. Interest is payable semi-annually on June 30 and December 31 of each year beginning on 6/30/X1. Moreno uses the effective-interest method.Required: Prepare the journal entries (in proper form) for the dates noted below. Explanations are not needed.DateDebitCredit1/1/X1INTEREST EXPENSE400000SUPPLUSE4000006/30/X1CASH429300INTEREST EXPENSE429300A. Rounded to the nearest whole dollar, how much will each of the annual payments be?Answer: $__45000_________(round to nearest whole dollar)B. What will be the total interest expense the company will incur over the entire 3 years?Answer: $_____10000_______C. Rounding all calculations to the nearest whole dollar and using the effective interest method, fill in missing spaces (gray blocks) in the partial amortization schedule below. Double-check that your answer to part “B” matches the total interest expense amount in your schedule. Because of rounding, you may need to adjust your final interest expense calculation by $2.D. Accounting Check √ Does your answer to part “B” equal the total interest expense per your amortization schedule. If your answer is not “yes”, please go back and check your work.E. Although each payment is equal in amount, a different portion of each payment is allocated towards principal and interest each year. In which year will the company pay the most versus the least amount of interest? Explain your answer (1 – 2 sentences)Answer:YESF. In the journal below, journalize the purchase of the equipment on January 1, 20X1, as well as the first installment payment on 12/31/X1.DateDebitCredit1/1/X112/31/X1DateDebitCredit1/1/X1BOND INTEREST102000CASH102000Note to Student: This page is optional. It should be completed if you need assistance in computing the answer for Problem II.Problem II: On 1/1/X1, Wolfpack Inc. issues 3-year bonds with a face value of $50,000 and a face (stated) rate of 4% compounded semi-annually. The market interest