Sikes Corporation, whose annual accounting period ends on December 31, issued the following bonds:
Date of bonds: January 1, 2009
Maturity amount and date: $100,000 due in 10 years
Interest: 10 percent per annum payable each June 30 and December 31
Date sold: January 1, 2009
Straight-line amortization is used

Required:
1. Provide the following amounts to be reported on the December 31, 2009 financial statements:

2. Explain why items a and f in requirement (1) are different.
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 list price for a car instead of negotiating a discount.€ Write a brief letter in response to thequestion.

Issued at Par at99 a 104 Case A Case B Case C a. Interest expense b. Bonds payable c. Unamortized premium or discount d. Net liability e. Stated rate of interest f Cash interest paid