Computing Amounts under Effective Interest and Straight-Line Interest Methods

For the following separate bond issues, assume that the bonds are sold on January 1 of Year 1, interest is paid semiannually on July 1 and December 31, and the bond term is 5 years. Complete the following schedule by measuring the bond selling price on January 1 of Year 1, and interest expense and interest paid for Year 1.

• Note: Round your answers to the nearest whole dollar.

Case	Face Value of Bonds	Stated Rate	Market Rate	Amortization Method	Bond Selling Price	Interest Expense Year 1	Interest Paid Year 1
1	$30,000	5%	6%	Effective interest
2	120,000	4%	5%	Effective interest
3	390,000	5%	4%	Straight-line
4	1,500,000	0%	7%	Straight-line
5	240,000	7%	6%	Effective interest
6	300,000	6%	8%	Straight-line