II. Long-term Bonds

The following excerpt appeared in the long-term debt note of Rally Entertainment Corporations 2015 10-K report. Assume that Rally makes interest payments on these bonds on June 30 and December 31 each year.

	2015	2014
8.625% Bonds due 2020, including unamortized premium of $4,462 and $5,162 ..	$304,462	$305,162

Required:

1. What amount of interest was paid in cash in 2015?

2. What amount of interest expense was reported in Rallys 2015 income statement?

3. Assume that on January 2, 2016, Rally decided to retire these bonds by repurchasing them from the bondholders. The market interest rate on that date was 7%. What amount would Rally pay to retire these bonds?