Cagney Company sold $200,000 of bonds on June 30, 2010. A portion of the amortization table appears below.

Required:
1. Indicate the stated interest rate on these bonds.
2. Calculate the effective annual interest rate on these bonds (rounded to the nearest 0.1 percent).
3. Determine the interest expense and discount amortization for the interest period ending December 31, 2012.
4. Determine the liability balance after the interest payment is recorded on December 31,2012.

Transcribed Image Text:

Discount Discount Interest on Bonds on Bonds Cash Payment Expense Payable Payable Carrying Period 12/31/11 6/30/12 12/31/12 (Credit) (Debit) (Credit) Balane Value $9,000 9,000 $9,277 9,290 $277 290 $2,340 $197,660 2,050 197,950