  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

Step 1

We’ll answer the first question since the exact one wasn’t specified. Please submit a new question specifying the one you’d like answered

Step 2

A straight line method of bond amortisation amortises the ...

Want to see the full answer?

See Solution

Want to see this answer and more?

Our solutions are written by experts, many with advanced degrees, and available 24/7

See Solution
Tagged in 