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Wellman issued $460,000, 7.5%, 14-year bonds on January 1, 2018, for $630,066. This price resulted in an effective interest rate of 4% on the bonds.

Wellman issued $460,000, 7.5%, 14-year bonds on January 1, 2018, for $630,066. This price resulted in an effective interest rate of 4% on the bonds. Interest is paid annually on December 31. Wellman uses the effective-interest method to amortize bond premium or discount.

Questions 1-5

1.Based on the foregoing facts, what is the amount of interest expense to be recorded on the 2021 income statement of Wellman?

2.Based on the foregoing facts, what is the amount of bond premium that should be recorded on the issuance of the bond?

3.Based on the foregoing facts, what is the total amount of interest PAID over the entire life of the bond?

4.Based on the foregoing facts, what is the total amount of interest EXPENSE incurred over the entire life of the bond?

5.Based on the foregoing facts, what is the amount of the remaining bond premium that reported on the balance sheet of Wellman at December 31, 2021?

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