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Cardinals Co issued $3,000,000 of its 10%, 12-year bonds on their authorized date of 4/1/17. The bonds were issued at a price of $2,623,494 to
Cardinals Co issued $3,000,000 of its 10%, 12-year bonds on their authorized date of 4/1/17. The bonds were issued at a price of $2,623,494 to produce an effective yield of 12%. Interest payments are made twice per year, 4/1 and 10/1, with discounts and premiums being amortized using the effective interest method.
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** REQUIRED: 1) Determine the following items: a) balance of the discount account at 4/1/18. 361242 b) amount of interest expense reported FYE 12/31/18. 316665 c) carry value of the bonds at 12/31/18. 2651496 d) total cost of borrowing over the life of the bond. 3976506 Here are the correct answers, can you please explain how they were computed. |
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