Hello and welcome everyone to our lesson today, which we are going to dedicate to one of the complications with respect to issuance of the bond. Sometimes and because of multiple possible reasons, for example, a weak market, a bond can be actually issued after the date that is printed on the indenture contract. In this case, we refer to this later date as the actual selling date of the bond because the bond actually is sliced into tradable pieces, so a portion of it can be traded or can be issued to different lenders and obviously different dates. In this particular lesson, we are talking about issuing the bond between interest dates because the bond indenture has already been printed, the coupons are printed, and the payment is actually stated on the coupon. What if I sold portion of the bond after or between interest dates? Let's visualize the case that I'm talking about on that following timeline in front of you. This is simply a bond timeline for a bond issuance, but three particular dates are specified in front of you, A, B, and C. A is the bond issue date. That's where it was printed and is ready to be sold. But for whatever reason, I did not actually sell it until point B between the periodic interest time. C is the due date for the coupon payment. You need to notice that in point C, the coupon will be redeemed for the interest stated on that coupon. But if the lender did not invest in the bond until point B, then he or she does not deserve the interest from point A to B. Because at the time A and B, the period from A to B, I did not, as a borrower, borrow the money, so I do not need to pay the interest. But at point C, when the lender present the coupon, I'll pay the interest as a borrower for the whole period from A to C. That is the problem that we are going to deal with in today's lesson. Let's get into the details and discuss what we need to do the adjustment. If the figure in front of you simply, I want you, as I'm speaking, to point to the figure, to the timeline so that A, B, and C has to be clear in front of you. As I said, in point B, where I actually sold the bond to the lender, I actually will have the value of the bond at the time. In a case of issuing the bond at face value, no discount or premium. It's so simple, the case is so simple, why? Because the value of the bond is constant throughout this timeline. The value of the bond at point A, B, C, and all throughout is the same. The only problem here, when I issue the bond at face value between interest date, is that on the issuance date, the selling of the bond, the issuer will collect in advance the interest for the period from A to B. That interest will be collected in advance so that when point C comes and the lender redeem the coupon, now the borrower is paying the interest for the whole period from A to C, but he or she already pre collected the interest from A and B, so it boils down to paying actually the interest only from B to C. That is simply the case when the bond is issued at face value. When the bond is issued at a premium or a discount, there is one more complication, and that's basically because the carrying value or the value of the bond at point A is different than point B is different than point C. So in addition to the accrued interest that will be pre collected for the period from A to B, we need to actually also calculate the value of the discount at point B or the value of the premium at point B so we can infer the carrying value of the bond at point B. In this case, the journal entries are summarized in all the three cases as follows. In the case of issuing the bond at face value, as I said, the debit would be cash and the bond payable will be credit, and the interest payable will be credit. That interest payable is the accrued interest from point A to point B, as we mentioned before. In the case of issuing the bond at discount between interest date, you can see actually also the interest payable because I pre-collected that, so it will be payable with the coupon when it comes due, and actually I have the cash and the debit to discount and the bonds payable as a credit. The discount on bonds payable, that has to be clear in front of you, that the discount value at point A is different than point B, and that will add some challenge for the bond that was issued at a discount between interest dates. Finally, the last one is when I issue the bond at a premium. Again, the same idea, the interest payable, which is the accrued interest from point A to B, is pre collected in advance, that will be paid off again with the coupon rate. In summary, when the bond is issued between interest dates, the bond issuer will get in cash the carrying value of the bond at the actual selling date plus the accrued interest for the period from the bond issue date or the last interest payment date until the actual selling date of the bond. Thank you very much.