Stein Corporation issued a $ 1,000 bond on January 1, 2014. The bond specified an interest rate of 9 percent payable at the end of each year. The bond matures at the end of 2016. It was sold at a market rate of 11 percent per year. The following schedule was completed:
1. What was the bond’s issue price?
2. Did the bond sell at a discount or a premium? How much was the premium or discount?
3. What amount of cash was paid each year for bond interest?
4. What amount of interest expense should be shown each year on the statement of earnings?
5. What amount(s) should be shown on the statement of financial position for bonds payable at each year- end? (For 2016, show the balance just before repayment of the bond.)
6. What method of amortization was used?
7. Show how the following amounts were computed for 2015:
(a) $ 106,
(b) $ 16,
(c) $ 982.
8. Is the method of amortization that was used preferable? Explain why.

  • CreatedAugust 04, 2015
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