Jones Company issued bonds with a $170,000 face value on January 1, Year 1. The five-year term bonds were issued at 98 and had a 7.00% stated rate of interest that is payable in cash on December 31^st of each year. Jones amortizes the bond discount using the straight-line method. Based on this information:

The amount of interest expense shown on Jones's December 31, Year 1 income statement would be:

Multiple Choice

• $11,220.

• $11,900.

• $13,260.

• $12,580.

Weller Company issued bonds with a face value of $400,000, a 10% stated rate of interest, and a 10-year term. The bonds were issued on January 1, Year 1, and Weller uses the effective interest method of amortization. The market rate of interest on the date of issue was 8%. Interest is paid annually on December 31.

Assuming Weller issued the bonds for $453,681, the carrying value of the bonds on the December 31, Year 3 balance sheet would be closest to:

Multiple Choice

• $431,942.

• $445,974.

• $441,651.

• $436,984.