Cagney Company sold $200,000 of bonds on June 30, 2010. A portion of the amortization table appears below.

Required:
1. Indicate the stated interest rate on these bonds.
2. Calculate the effective annual interest rate on these bonds (Note: Round to the nearest 0.1percent).
3. Determine the interest expense and discount amortization for the interest period ending December 31, 2012
4. Determine the liability balance after the interest payment is recorded on December 31, 2012.

Transcribed Image Text:

Cash Payment Interest Discount on Bonds Discount on Bonds Carrying (Credit) Expense (Debit) Payable (Credit Payable Balance Value $277 Period 12/31/1 $9,000 06/30/12 9,000 12/31/12 $9,277 9.290 $2,340 2,050 $197,660 197,950 290