Eagle Corporation issued $9,640,000, 5 percent bonds dated April 1, year 1. The market rate of interest was 6 percent, with interest paid each March 31. The bonds mature in three years, on March 31, year 4. Eagles fiscal year ends on December 31. Use Table 9C.1, Table 9C.2.

Required:

1. What was the issue price of these bonds? (Round time value factor to 4 decimal places. Round the final answer to the nearest whole dollar.)

2. Compute the bond interest expense for the fiscal year ended December 31, year 1. The company uses the effective-interest method of amortization. without a discount account. (Round time value factor to 4 decimal places. Round intermediate and final answer to the nearest whole dollar.)

3. Show how the bonds should be reported on the statement of financial position at December 31, year 1. (Round intermediate and final answer to the nearest whole dollar.)

4-a. What amount of interest expense will be recorded on March 31, year 2? (Round time value factor to 4 decimal places. Round the final answer to the nearest dollar amount.)

4-b. Is this amount different from the amount of cash that is paid?

multiple choice

• Yes

• No

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