On January 1,2011,Sea the World Cruises,Inc.issued $100,000 worth of 8%,10-year bonds at 88.The market rate of interest at the time of issue was 10%.Interest will be paid semiannually on June 30 and December 31.Sea the World Cruises uses the effective interest method for amortizing any bond discounts or premiums.
Part A: For each item listed below,fill in the correct dollar amount in the column that represents the financial statement where the item will appear:
Part B: Answer the following questions assuming the company uses straight-line amortization:
1.Interest expense every six months will be $____________________.
2.The carrying value of the bonds at December 31,2011 will be $_________________.
3.The carrying value of the bonds at December 31,2012 will be $_________________.

Question

On January 1,2011,Sea the World Cruises,Inc.issued $100,000 worth of 8%,10-year bonds at 88.The market rate of interest at the time of issue was 10%.Interest will be paid semiannually on June 30 and December 31.Sea the World Cruises uses the effective interest method for amortizing any bond discounts or premiums.
Part A: For each item listed below,fill in the correct dollar amount in the column that represents the financial statement where the item will appear:
  Part B: Answer the following questions assuming the company uses straight-line amortization:
1.Interest expense every six months will be $____________________.
2.The carrying value of the bonds at December 31,2011 will be $_________________.
3.The carrying value of the bonds at December 31,2012 will be $_________________.

Quizplus · Accepted Answer

The Answer of On January 1,2011,Sea the World Cruises,Inc.issued $100,000 worth of 8%,10-year bonds at 88.The market rate of interest at the time of issue was 10%.Interest will be paid semiannually on June 30 and December 31.Sea the World Cruises uses the effective interest method for amortizing any bond discounts or premiums.
Part A: For each item listed below,fill in the correct dollar amount in the column that represents the financial statement where the item will appear:
  Part B: Answer the following questions assuming the company uses straight-line amortization:
1.Interest expense every six months will be $____________________.
2.The carrying value of the bonds at December 31,2011 will be $_________________.
3.The carrying value of the bonds at December 31,2012 will be $_________________.