On January 1, Year 1, Hart Company issued bonds with a face value of $60,000, a stated

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On January 1, Year 1, Hart Company issued bonds with a face value of $60,000, a stated rate of interest of 8 percent, and a five-year term to maturity. Interest is payable in cash on December 31 of each year. The effective rate of interest was 9 percent at the time the bonds were issued. The bonds sold for $57,666. Hart used the effective interest rate method to amortize the bond discount. Round all answers to nearest whole dollar.

a. Determine the amount of the discount on the day of issue.

b. Determine the amount of interest expense recognized on December 31, Year 1.

c. Determine the carrying value of the bond liability on December 31, Year 1.

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a Face Value Bond Price Discount 60000 57666 2334 b Carrying Value x Effective Rate Interest Expen...View the full answer

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Survey Of Accounting

ISBN: 9781260575293

6th Edition

Authors: Thomas Edmonds, Christopher Edmonds, Philip Olds

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Question Posted: Dec 01, 2020 05:51 AM

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On January 1, Year 1, Hart Company issued bonds with a face value of $60,000, a stated

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a Face Value Bond Price Discount 60000 57666 2334 b Carrying Value x Effective Rate Interest Expen...View the full answer

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