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Huskey Mining Corporation issued bonds with a par value of $90,000 on January 1, 2020. The annual contract rate on the bonds is 8.00%, and the interest is paid semiannually. The bonds mature after three years. The annual market interest rate at the date of issuance was 10.00%, and the bonds were sold for $85,431. a. What is the amount of the original discount on these bonds? Discount b. How much total bond interest expense will be recognized over the life of these bonds? (Do not round intermediate calculations Round the final answer to the nearest whole dollar.) Total interest expense

Huskey Mining Corporation issued bonds with a par value of $90,000 on January 1, 2020. The annual contract rate on the bonds is 8.00%, and the interest is paid semiannually. The bonds mature after three years. The annual market interest rate at the date of issuance was 10.00%, and the bonds were sold for $85,431. a. What is the amount of the original discount on these bonds? Discount b. How much total bond interest expense will be recognized over the life of these bonds? (Do not round intermediate calculations Round the final answer to the nearest whole dollar.) Total interest expense

Financial & Managerial Accounting
Financial & Managerial Accounting
13th Edition
ISBN:9781285866307
Author:Carl Warren, James M. Reeve, Jonathan Duchac
Publisher:Carl Warren, James M. Reeve, Jonathan Duchac
Chapter12: Long-Term Liabilities: Bonds And Notes
Section: Chapter Questions
Problem 12.5BPR
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Exercise 14-8 Allocation of interest for bonds sold at a discount LO5 Huskey Mining Corporation issued bonds with a par value of $90,000 on January 1, 2020. The annual contract rate on the bonds is 8.00%, and the interest is paid semiannually. The bonds mature after three years. The annual market interest rate at the date of issuance was 10.00%, and the bonds were sold for $85,431. a. What is the amount of the original discount on these bonds? Discount b. How much total bond interest expense will be recognized over the life of these bonds? (Do not round intermediate calculations. Round the final answer to the nearest whole dollar.) Total interest expense
Transcribed Image Text:Exercise 14-8 Allocation of interest for bonds sold at a discount LO5 Huskey Mining Corporation issued bonds with a par value of $90,000 on January 1, 2020. The annual contract rate on the bonds is 8.00%, and the interest is paid semiannually. The bonds mature after three years. The annual market interest rate at the date of issuance was 10.00%, and the bonds were sold for $85,431. a. What is the amount of the original discount on these bonds? Discount b. How much total bond interest expense will be recognized over the life of these bonds? (Do not round intermediate calculations. Round the final answer to the nearest whole dollar.) Total interest expense
c. Present an amortization table for these bonds; use the effective interest method of allocating the interest and amortizing the discount. (Do not round intermediate calculations. Round the final answers to the nearest whole dollar. Enter all the amounts as positive values.) Period Ending Cash Interest Paid Period Interest Discount Unamortized Carrying Value Expense Amortization Discount Jan. 1/20 June 30/20 Dec. 31/20 June 30/21 Dec. 31/21 June 30/22 Dec. 31/22 Totals
Transcribed Image Text:c. Present an amortization table for these bonds; use the effective interest method of allocating the interest and amortizing the discount. (Do not round intermediate calculations. Round the final answers to the nearest whole dollar. Enter all the amounts as positive values.) Period Ending Cash Interest Paid Period Interest Discount Unamortized Carrying Value Expense Amortization Discount Jan. 1/20 June 30/20 Dec. 31/20 June 30/21 Dec. 31/21 June 30/22 Dec. 31/22 Totals
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