Question
On January 1, 2014, Sidewinder, Inc. issued a 5-year bonds with a face value of $100,000 and an annual stated interest rate of 10%. Interest
On January 1, 2014, Sidewinder, Inc. issued a 5-year bonds with a face value of $100,000 and an annual stated interest rate of 10%. Interest payments are made semi-annually on June 30 and December 31st. The bonds were issued for $92,640, when the market rate of interest was 12%.
1) How much interest must Sidewinder, Inc. pay on June 30, 2014?
2) How much interest expense does Sidewinder record for six months July 1-December 31, 2014?
3) What is the book value of bonds payable, after the third semi-annual interest payment (i.e. the final balance on June 30, 2015)?
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