On June 30, 2020, Pearl Company issued $4,860,000 face value of 14%, 20-year bonds at $5,591,240, a yield of 12%. Pearl uses the effective-interest method to amortize bond premium or discount. The bonds pay semiannual interest on June 30 and December 31.

A) Show the proper balance sheet presentation for the liability for bonds payable on the December 31, 2021, balance sheet.

B) Provide the answers to the following questions. (1) What amount of interest expense is reported for 2021? (Round answer to 0 decimal places, e.g. 38,548.)

Interest expense reported for 2021

$

(2) Will the bond interest expense reported in 2021 be the same as, greater than, or less than the amount that would be reported if the straight-line method of amortization were used?

The bond interest expense reported in 2021 will be greater than, less than, same as the amount that would be reported if the straight-line method of amortization were used.

(3) Determine the total cost of borrowing over the life of the bond. (Round answer to 0 decimal places, e.g. 38,548.)

Total cost of borrowing over the life of the bond

$

(4) Will the total bond interest expense for the life of the bond be greater than, the same as, or less than the total interest expense if the straight-line method of amortization were used?

The total bond interest expense for the life of the bond will be greater than, less than, the same as the total interest expense if the straight-line method of amortization were used.