On January 1, 2021, Yellow Company issued a 6% $200,000 bond for $208,000. The market rate...

  

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On January 1, 2021, Yellow Company issued a 6% $200,000 bond for $208,000. The market rate for a bond of this type is 5%. The bond pays interest semi-annually on June 30 and December 31. The bond is a 10-year bond. 1) Use the data above. What is the total interest expense for this bond on June 30, 2021 assuming that the company uses the effective interest method of amortization? 2) Use the data above. What is the total interest expense for the six months ending on December 31, 2021 assuming that the company uses the effective interest method of amortization? 3) Use the data above. What is the carrying value of the bond on December 31, 2022 assuming the company uses the straight-line method of amortization? 4) Use the data above. What is the total interest expense for the year ending December 31, 2021 assuming the company uses the straight-line method of amortization? 5) Use the data above. What is the carrying value of the bond on December 31, 2024 assuming the company uses the straight-line method of amortization? 6) Use the data above. What is the total interest expense over the life of this bond assuming the straight-line method of amortization? 7) On January 1, 2015, Red Company issued an 8% callable bond which has a par value of $100,000 for $90,000. The bond is callable at 105 any time after January 1, 2020. The entire bond was called back on January 1, 2021 when the unamortized discount had a balance of $1,500. Compute the amount of the gain or loss when the bond was retired on January 1, 2021. 8) If a company uses the straight-line method of amortization, the interest expense per period will be the same throughout the life of the bond regardless whether the bond was issued at a discount or a premium. (True/False) 9) A bond was issued on June 1, 2021. The interest dates of the bond are February 1 and August 1. The number of total months of interest expense incurred for the year ended December 31, 2021 should be? 10) The condition for bond issued at a premium is that the market rate is greater than the effective interest rate of interest. (True/False) On January 1, 2021, Yellow Company issued a 6% $200,000 bond for $208,000. The market rate for a bond of this type is 5%. The bond pays interest semi-annually on June 30 and December 31. The bond is a 10-year bond. 1) Use the data above. What is the total interest expense for this bond on June 30, 2021 assuming that the company uses the effective interest method of amortization? 2) Use the data above. What is the total interest expense for the six months ending on December 31, 2021 assuming that the company uses the effective interest method of amortization? 3) Use the data above. What is the carrying value of the bond on December 31, 2022 assuming the company uses the straight-line method of amortization? 4) Use the data above. What is the total interest expense for the year ending December 31, 2021 assuming the company uses the straight-line method of amortization? 5) Use the data above. What is the carrying value of the bond on December 31, 2024 assuming the company uses the straight-line method of amortization? 6) Use the data above. What is the total interest expense over the life of this bond assuming the straight-line method of amortization? 7) On January 1, 2015, Red Company issued an 8% callable bond which has a par value of $100,000 for $90,000. The bond is callable at 105 any time after January 1, 2020. The entire bond was called back on January 1, 2021 when the unamortized discount had a balance of $1,500. Compute the amount of the gain or loss when the bond was retired on January 1, 2021. 8) If a company uses the straight-line method of amortization, the interest expense per period will be the same throughout the life of the bond regardless whether the bond was issued at a discount or a premium. (True/False) 9) A bond was issued on June 1, 2021. The interest dates of the bond are February 1 and August 1. The number of total months of interest expense incurred for the year ended December 31, 2021 should be? 10) The condition for bond issued at a premium is that the market rate is greater than the effective interest rate of interest. (True/False)

Answer rating: 100% (QA)

1 ANSWER The total interest expense for this bond on June 30 2021 would be 6000 assuming that the company uses the effective interest method of amortization WORKING 6 of 200000 12000 12000 6000 5 of 2... View the full answer