Sikes Corporation, whose fiscal year ends on December 31, issued the following bonds:
Date of bonds: January 1, 2015
Maturity amount and date: $ 10 million due in 10 years (December 31, 2024)
Interest: 5 percent per annum payable each December 31
Date of sale: January 1, 2015
Required:
1. Provide the following amounts to be reported on the 2015 financial statements (use straight- line amortization and show amounts in thousands):

2. For each of cases B and C, explain why interest expense is different from cash paid for interest.
3. Assume that you are an investment adviser and a retired person has written to you asking, €œWhy should I buy a bond at a premium when I can find one at a discount? Isn€™t that stupid? It€™s like paying the list price for a car instead of negotiating a discount.€ Write a brief letter in response to the question.

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Issued at Par Case A at 96 Case B at 102 Case C a. Interest expense b. Bonds payable c. Unamortized premium or discount d. Carrying amount of bonds e. Stated rate of interest f Cash paid for interest