Question
Fora Corporation issues $2,000,000, 4%,10-year bonds to yield 5% on January 1, 2017. Interest is paid on June 30and December 31. The proceeds from the
Fora Corporation issues $2,000,000, 4%,10-year bonds to yield 5% on January 1, 2017. Interest is paid on June 30and December 31. The proceeds from the bonds are $1,844,106.
a)
Using effective-interest amortization, how much interest expense will be recognized in 2018?
b)Using effective-interest amortization,what will the carrying value of the bonds be on the December 31,2018 balance sheet?
c) Using straight-line amortization, how much interest expense will be recognized in 2019?
d) Using straight-line amortization,what will the carrying value of the bonds be on the December 31, 2019 balance sheet?
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