Sikes Corporation, whose fiscal year ends on December 31, issued the following bonds:

Date of bonds: January 1,2012 Maturity amount and date: \(\$ 10\) million due in 10 years (December 31,2021 )

Interest: 10 percent per annum payable each December 31 Date of sale: January 1,2012 Required:

1. Provide the following amounts to be reported on the 2012 financial statements (use straight-line amortization and show amounts in thousands):

2. Explain why items \((a)\) and \((f)\) in (1) are different for cases B and C.
3. Assume that you are an investment adviser and a retired person has written to you asking, "Why should I buy a bond at a premium when I can find one at a discount? Isn't that stupid? It's like paying the list price for a car instead of negotiating a discount." Write a brief letter in response to the question.

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a. Interest expense b. Bonds payable c. Unamortized premium or discount d. Carrying amount of bonds e. Stated rate of Interest f. Cash paid for interest Issued at Par at 96 al 102 Case A Case B Case C $ $ $