Straton Corporation issued $10,000,000 of 7 percent,20-year bonds at a discount.The bonds are retired prior to maturity at 103.The book value of the bonds is $9,853,000 at this time.Straton Corporation amortizes bond premiums using the effective-interest method.
a_Was the contract rate on the bonds at the time of issuance greater or less than the market rate of interest? Explain.
b_Prepare the journal entry to record the retirement of the bonds.
c_Assume that the bonds were redeemed at maturity.Would the total cash interest paid be different if the company used the straight-line method of amortization of premiums? Explain.

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The Answer of Straton Corporation issued $10,000,000 of 7 percent,20-year bonds at a discount.The bonds are retired prior to maturity at 103.The book value of the bonds is $9,853,000 at this time.Straton Corporation amortizes bond premiums using the effective-interest method.
a_Was the contract rate on the bonds at the time of issuance greater or less than the market rate of interest? Explain.
b_Prepare the journal entry to record the retirement of the bonds.
c_Assume that the bonds were redeemed at maturity.Would the total cash interest paid be different if the company used the straight-line method of amortization of premiums? Explain.

Straton Corporation Issued $10,000,000 of 7 Percent,20-Year Bonds at a Discount.The