On December 31,2010,Crystal Palace,Inc.issued $100,000 worth of 9% bonds at 107.The market rate of interest at the time of issue was 8%.These are 10-year bonds with interest paid semiannually on June 30 and December 31.The company uses the effective-interest method to amortize the discount.
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 A:

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 31,2010 will be $____________________.
3.The carrying value of the bonds at December 31,2011 will be $____________________.

Question

On December 31,2010,Crystal Palace,Inc.issued $100,000 worth of 9% bonds at 107.The market rate of interest at the time of issue was 8%.These are 10-year bonds with interest paid semiannually on June 30 and December 31.The company uses the effective-interest method to amortize the discount.
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 A:
 
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 31,2010 will be $____________________.
3.The carrying value of the bonds at December 31,2011 will be $____________________.

Quizplus · Accepted Answer

The Answer of On December 31,2010,Crystal Palace,Inc.issued $100,000 worth of 9% bonds at 107.The market rate of interest at the time of issue was 8%.These are 10-year bonds with interest paid semiannually on June 30 and December 31.The company uses the effective-interest method to amortize the discount.
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 A:
 
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 31,2010 will be $____________________.
3.The carrying value of the bonds at December 31,2011 will be $____________________.