Stanford issues bonds dated January 1, 2019, with a par value of $250,000. The bonds annual contract rate is 9%, and interest is paidsemiannually on June 30 and December 31. The bonds mature in three years. The annual market rate at the date of issuance is 12%,and the bonds are sold for $231,570.1. What is the amount of the discount on these bonds at issuance?2. How much total bond interest expense will be recognized over the life of these bonds?3. Prepare an effective interest amortization table for these bonds.

Bonds payable are one of the sources of finance and are shown as liability. If the interest rate is…

Answered: dated Janun ne 30 and Dece old for…

Business

Accounting

dated Janun ne 30 and Dece old for $231,570 nt of the discour

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter14: Financing Liabilities: Bonds And Long-term Notes Payable

Section: Chapter Questions

Problem 8RE

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Concept explainers

Deferred Tax

Deferred tax is an estimated future tax which is made while preparing accounts. It is estimated as a result of past and present transactions in the financial statements. It is not the actual tax which needs to be paid or refundable from the revenue authority, it is an accounting entry. It exists because of the difference between accounting profits and taxable profits.

Question

Stanford issues bonds dated January 1, 2019, with a par value of $250,000. The bonds annual contract rate is 9%, and interest is paid
semiannually on June 30 and December 31. The bonds mature in three years. The annual market rate at the date of issuance is 12%,
and the bonds are sold for $231,570.
1. What is the amount of the discount on these bonds at issuance?
2. How much total bond interest expense will be recognized over the life of these bonds?
3. Prepare an effective interest amortization table for these bonds.

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