(a) Waterway Co. sold $1,950,000 of 12%, 10-year bonds at 106 on January 1, 2020. The bonds were dated January 1, 2020, and pay interest on July 1 and January 1. If Waterway uses the straight-line method to amortize bond premium or discount, determine the amount of interest expense to be reported on July 1, 2020, and December 31, 2020.
Presented below are two independent situations.
(a) Waterway Co. sold $1,950,000 of 12%, 10-year bonds at 106 on January 1, 2020. The bonds were dated January 1, 2020, and pay interest on July 1 and January 1. If Waterway uses the straight-line method to amortize bond premium or discount, determine the amount of interest expense to be reported on July 1, 2020, and December 31, 2020. (Round answer to 0 decimal places, e.g. 38,548.)
| Interest expense to be recorded | $
|
(b) Wildhorse Inc. issued $570,000 of 9%, 10-year bonds on June 30, 2020, for $471,929. This price provided a yield of 12% on the bonds. Interest is payable semiannually on December 31 and June 30. If Wildhorse uses the effective-interest method, determine the amount of interest expense to record if financial statements are issued on October 31, 2020. (Round intermediate calculations to 6 decimal places, e.g. 1.251247 and final answer to 0 decimal places, e.g. 38,548.)
| Interest expense to be recorded | $
|
Trending now
This is a popular solution!
Step by step
Solved in 2 steps with 2 images
