On January 1, Year 1, Hanover Corporation issued bonds with a face value of $300,000 and a 10-year term to maturity. On that date, the market interest rate was 7%. The bonds were issued at 103.5. Interest in the amount of $22,495 is payable in cash on December 31 of each year. Hanover Corporation uses the effective interest method to amortize discounts and premiums on bonds. (Round all intermediate calculations to two decimal places and final answers to whole dollars.)Required:a)Determine the amount of the premium on the bonds when they were issued.b)(1)Determine the amount of interest expense for Year 1.b)(2)Determine the amount of premium amortization for Year 1.c)Determine the carrying value of the bonds on December 31, Year 1.d)Determine the amount of interest expense for Year 2.
Answer Key
Test name: chapter 10

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The Answer of On January 1, Year 1, Hanover Corporation issued bonds with a face value of $300,000 and a 10-year term to maturity. On that date, the market interest rate was 7%. The bonds were issued at 103.5. Interest in the amount of $22,495 is payable in cash on December 31 of each year. Hanover Corporation uses the effective interest method to amortize discounts and premiums on bonds. (Round all intermediate calculations to two decimal places and final answers to whole dollars.)Required:a)Determine the amount of the premium on the bonds when they were issued.b)(1)Determine the amount of interest expense for Year 1.b)(2)Determine the amount of premium amortization for Year 1.c)Determine the carrying value of the bonds on December 31, Year 1.d)Determine the amount of interest expense for Year 2.
Answer Key
Test name: chapter 10

On January 1, Year 1, Hanover Corporation Issued Bonds with a Face