1)

Sail and Sink Inc. issues $425,000 of 6%, 5-year bonds for cash proceeds of $390,529. The market interest rate is 8%. Interest is paid semi-annually.

To the nearest dollar, how much bond interest expense is recorded on the first interest date?

Question 1 options:

a)

$2,871

b)

$15,621

c)

$17,000

d)

$12,750

2)

Sail and Sink Inc. issues $425,000 of 6%, 5-year bonds for cash proceeds of $390,529. The market interest rate is 8%. Interest is paid semi-annually.

To the nearest dollar, whatis the carrying amount of the bonds after the first interest payment?

Question 2 options:

a)

$387,658

b)

$425,000

c)

$393,400

d)

$395,600