Presented below are two independent situations. (a) Novak Co. sold $2,080,000 of 12%, 10-year bonds at 105 on January 1, 2020. The bonds were dated January 1, 2020, and pay interest on July 1 and January 1. If Novak 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) Splish Inc. issued $590,000 of 9%, 10-year bonds on June 30, 2020, for $488,488. This price provided a yield of 12% on the bonds. Interest is payable semiannually on December 31 and June 30. If Splish 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

Question

Presented below are two independent situations.

(a) Novak Co. sold $2,080,000 of 12%, 10-year bonds at 105 on January 1, 2020. The bonds were dated January 1, 2020, and pay interest on July 1 and January 1. If Novak 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) Splish Inc. issued $590,000 of 9%, 10-year bonds on June 30, 2020, for $488,488. This price provided a yield of 12% on the bonds. Interest is payable semiannually on December 31 and June 30. If Splish 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

 

Expert Answer

Want to see the step-by-step answer?

See Answer

Check out a sample Q&A here.

Want to see this answer and more?

Experts are waiting 24/7 to provide step-by-step solutions in as fast as 30 minutes!*

See Answer
*Response times vary by subject and question complexity. Median response time is 34 minutes and may be longer for new subjects.

Related Accounting Q&A

Find answers to questions asked by student like you
Show more Q&A

Q: Land and building were purchased by a restaurant for $225,000. The down payment was $75,000, and the...

A: Mortgage payable is a liability that needs to be paid by the property owner for the loan amount that...

Q: unland, Inc. produces three types of balloons—small, medium, and large—with the following characteri...

A: Calculate the contribution margin per hour:

Q: I attempted this problem and tried to do the company's statement of cost of goods manufactured for d...

A: Statement of cost of goods manufactured: It is a statement which reports the detailed cost breakup o...

Q: Milden Company has an exclusive franchise to purchase a product from the manufacturer and distribute...

A: Contribution margin income statement: It is a kind of income statement which reports the sales, vari...

Q: Winkle, Kotter, and Zale is a small law firm that contains 10 partners and 12 support persons. The f...

A: 1-aCalculate predetermined overhead rate for Research and Document Department: 

Q: (Adjusting Entry for Sales Tax and VAT) Eastwood Ranchers sells a herd of cattle to Rozo Meat Packer...

A: Calculate the value added tax (VAT) of Company R.

Q: Operating Leverage Westminster Co. reports the following data: Sales $875,000 Variable costs 42...

A: Operating leverage: Operating leverage is a financial ratio which measures the extent to which the o...

Q: Effects of a stock split Assume that you own 3,600 shares of $10 par value common stock and the comp...

A: Calculate the number of common stock after stock split.

Q: Angie Silva has recently opened The Sandal Shop in Brisbane, Australia, a store that specializes in ...

A: Part 1. Break-even point represents that point of sales at which total cost incurred by a company is...