Hello and welcome everyone. We are going to continue our discussion today on bond,. But today, we're going to focus on a very special issue which we refer to as the issuance of the bond between interest dates. We are going to continue with the example, but we're going to modify a little bit of a small feature, and here you go. I made it that on April 1st, 2021, Universal Company issued a 10% bond dated January 1st. So the bond, because it was issued, the paperwork was printed, it's ready. But for whatever reason, the bond was not sold out, the lenders did not actually invest and lend us the money, except until April 1st. So there is a time frame between January 1st til April 1st that I, as a borrower, Universal did not borrow the money. But the problem, when the coupon comes on June 30th, it's already printed out. And I'm not going to change it because it's printed and it's all ready, the paperwork has been done. So I will actually pay six months' worth of interest, which is not fair for me because I, Universal did not borrow the money from January 1st. Here, what we call that, why issue the bond on April 1st between interest dates? Universal will collect in advance on that time the accrued interest from January 1st til April 1st. Those three months, Universal will collect them in advance. So when I, Universal, pay the coupon on June 30th, I would have already collected in advance from January 1st to April 1st. So the net that I would be paying in the bond coupon on June 30th is basically from April 1st til June 3rd. How is that happening, that's the idea in general explaining what we're going to do, and that's what we call accrued interest. And that's why, when we issue the bond, it is issued plus accrued interest, that's one point. The other point, that the carrying value of the bond on January 1st is different than the carrying value of the bond on April 1st. So that's the second part of the problem. Now I need to calculate the carrying value of the bond on April 1st, which is the actual issuance date of the month. Let's take that and see how we're going to survive with preparing the journal on April 1st, on June 30th, and on December 31st, 2021. The first step is to calculate the price of the bond on January 1st, which we did before. Carrying value of the bond, the present value of the 50,000, the coupon, which is the order annuity, and basically the 1 million, and the 6%. So calculate the present value, I got 885,300, which I got in previous examples. Okay, now when I issue the bond on April 1st, I need to first calculate, this is the carrying value of the bond on January 1st. On April 1st, actually, the carrying value of the bond will be different because there is a portion of the discount that needs to be amortized. And here is how I calculate the carrying value. The carrying value of the bond on April 1st, 2021 equals the carrying value of the bond on January 1st, 2021, plus the discount amortization for those three months from January 1st until April 1st. Here basically, that actually could be, instead of divided by 2, it could be 3 divided by 6. But I took the discount for those first six months, and I divide it into two because three months have already passed. So the new carrying value of the bond on April 1st is 886,859, very good. Accrued interest, that's the second point, I said two issues. The accrued interest from January 1st til April 1st, I actually 1 million times the 10% times 3 over 12, I have 25,000 accrued interest that I will collect. And I will record it as Universal as interest payable, which will be paid off back with the coupon at the end, when I get to June 30th coupon. The cash collected will be the carrying value on April 1st which I calculated here, plus the accrued interest, which is the 25,000 that I calculated here. That is basically the amount that Universal will get on April 1st. Once I calculate that, I will be able to record my journal entry. Here is the cash that I'm getting, which I calculated down here, the 911,859. The value of the discount obviously is different than the value of the discount on January 1st. And the bonds payable, the face value, and the interest payable, 25,000. When it comes to June 30th, now I have the regular coupon, I have paid the 50,000 as Universal. There is another portion of the amortization of the discount from April 1st until June 30th. And then the interest payable that was collected in advance on April 1st. And then another three months' worth of interest, which are from April 1st until June 30th. That is the amount, let's see how did we do this calculation in Excel. Here is basically what we did before, and with the calculation, we got the 885. If you noticed, I added that April 1st, between January 1st, 2021 and June 30th, 2021, I added that April 1st to calculate the carrying value of the bond. Once I calculated the carrying value of the bond, which I have reflected in the journal entry. And I calculated the accrued interest building this row in the middle between January 1st and June 30th. After this, once I settle with the coupon on June 30th, the rest of the table looks exactly the same. Nothing happened whatsoever, it's just a modification for the first payment because of the accrued interest. And then we go and scroll down the same way that we did before. Now on December 31st, I made an adjustment for June 30th, type of accrued interest. While on December 31st, the value of the bond cash payment is the 50,000, and the interest expense would be the 53,305. I calculated it for the whole period and I multiplied it. 12% times the carrying value of the bond times 6 over 12. And this 888,418 is basically the carrying value on June 30th, which I used to calculate the carrying value, as I said, the amount of the discount for that period. So basically, the discount of the month, if you notice that the 3,305 plus the 1,559, that's the regular amortization of the discount that happened throughout the whole year, because of the issuance of the bond between interest dates. Hopefully that this will clarify the issue of issuing the bond between interest dates. To wrap up, two things, if there was issuance between interest dates, you need to calculate the accrued interest for the period that the bond was not authentic. And number two, to calculate the carrying value of the bond at the time of issuance, thank you very much.