The notes to Capshaw Biotech Inc.'s financial statements recently reported the following data on September 30, 2014, the company's yearend:
NOTE 4: INDEBTEDNESS
Long-term debt at September 30, 2014, included the following: 6.00-percent debentures due September 30, 2033, with an effective interest rate of 7.00 percent, net of unamortized discount of $206,712....................................................................................$1,793,288
Other indebtedness with an interest rate of 5.00 percent, due $408,000 in 2018 and $392,000 in 2019................................................................................................800,000
Assume Capshaw Biotech Inc. amortizes discount by the effective-interest method.
Required
1. Answer the following questions about Capshaw Biotech Inc.'s long-term liabilities:
a. What is the maturity value of the 6-percent debentures?
b. What are Capshaw Biotech Inc.'s annual cash interest payments on the 6-percent debentures?
c. What is the carrying amount of the 6-percent debentures at September 30, 2014?
d. How many years remain in the life of the 6-percent debentures?
2. Prepare an amortization table through September 30, 2017, for the 6-percent debentures.
Round all amounts to the nearest dollar, and assume Capshaw Biotech Inc. pays interest annually on September 30.
3. Record the September 30, 2016 and 2017, interest payments on the 6-percent debentures.
4. There is no premium or discount on the other indebtedness. Assuming annual interest is paid on September 30 each year, record Capshaw Biotech Inc.'s September 30, 2015, interest payment on the other indebtedness.