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On January 1, 2020, Texas Company issued a 6% $100,000 bond for $90,000. The market rate for a bond of this type is 8%. The
On January 1, 2020, Texas Company issued a 6% $100,000 bond for $90,000. The market rate for a bond of this type is 8%. The bond pays interest semi-annually on June 30 and December 31. The bond is a 5-year bond. 1) Use the data above. What is the total interest expense for this bond on June 30, 2020 assuming that the company uses the effective interest method of amortization? 2) Use the data above. What is the total interest expense for this bond on December 31, 2020 assuming that the company uses the effective interest method of amortization? 3) Use the data above. What is the carrying value of the bond on December 31, 2020 assuming the company uses the effective interest method of amortization? 4) Use the data above. What is the total interest expense for the bond at June 30, 2020 assuming the company uses the straight-line method of amortization? 5) Use the data above. What is the carrying value of the bond on December 31, 2020 assuming the company uses the straight-line method of amortization? 6) Use the data above. What is the total interest expense over the life of this bond assuming the effective interest method of amortization
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