Presented below are three independent situations. 

(a) CeCe Winans Corporation incurred the following costs in connection with the issuance of bonds: (1) printing and engraving costs, $12,000; (2) legal fees, $49,000; and (3) commissions paid to under- writer, $60,000. What amount should be reported as Unamortized Bond Issue Costs, and where should this amount be reported on the balance sheet? 

(b) George Gershwin Co. sold $2,000,000 of 10%, 10-year bonds at 104 on January 1, 2017. The bonds were dated January 1, 2017, and pay interest on July 1 and January 1. If Gershwin uses the straight- line method to amortize bond premium or discount, determine the amount of interest expense to be reported on July 1, 2017, and December 31, 2017. 

(c) Ron Kenoly Inc. issued $600,000 of 9%, 10-year bonds on June 30, 2017, for $562,500. This price provided a yield of 10% on the bonds. Interest is payable semiannually on December 31 and June 30. If Kenoly uses the effective-interest method, determine the amount of interest expense to record if financial statements are issued on October 31, 2017.

Answer rating: 100% (QA)

A Unamortized Bond Issue Costs Printing expense Legal fee Underwriter commission 12000 49... View the full answer