Question
13. On June 30, 2016, Hardy Corporation issued $11.5 million of its 8% bonds for $10.4 million. The bonds were priced to yield 10%. The
13.
On June 30, 2016, Hardy Corporation issued $11.5 million of its 8% bonds for $10.4 million. The bonds were priced to yield 10%. The bonds are dated June 30, 2016, and mature on June 30, 2026. Interest is payable semiannually on December 31 and July 1. If the effective interest method is used, by how much should the bond discount be reduced for the six months ended December 31, 2016? a) $66,500 b) $29,000 c) $58,500 d) $60,000
14. On January 1, 2016, Zebra Corporation issued 1,500 of its 11%, $1,000 bonds at 98.4. Interest is payable semiannually on January 1 and July 1. The bonds mature on January 1, 2026. Zebra paid $53,000 in bond issue costs. Zebra uses the straight-line amortization method. What is the bond book value reported in the December 31, 2016, balance sheet? a) $1,538,400 b) $1,478,400 c) $2,250,000 d) $2,303,000
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