Question

On January 1, 2014, Antonio Company issued $700,000 in bonds that mature in 10 years. The bonds have a stated interest rate of 8 percent and pay interest on June 30 and December 31 each year. When the bonds were sold, the market rate of interest was 10 percent. The company uses the straight-line amortization method.

Required:
1. What was the issue price on January 1, 2014?
2. What amount of interest expense should be recorded on (a) June 30, 2014? and (b) December 31, 2014?
3. What amount of cash interest should be paid on (a) June 30, 2014? and (b) December 31, 2014?
4. What is the book value of the bonds on (a) June 30, 2014? and (b) December 31, 2014?



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  • CreatedJuly 01, 2014
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