Determine the amount of interest expense to be reported

Reference no: EM131806902

Exercise

Presented below are three independent situations.

(a) Riverbed Co. sold $2,150,000 of 12%, 10-year bonds at 104 on January 1, 2017. The bonds were dated January 1, 2017, and pay interest on July 1 and January 1. If Riverbed uses the straight-line method to amortize bond premium or discount, determine the amount of interest expense to be reported on July 1, 2017, and December 31, 2017. (Round answer to 0 decimal places, e.g. 38,548.)

(b) Marin Inc. issued $640,000 of 8%, 10-year bonds on June 30, 2017, for $493,182. This price provided a yield of 12% on the bonds. Interest is payable semiannually on December 31 and June 30. If Marin uses the effective-interest method, determine the amount of interest expense to record if financial statements are issued on October 31, 2017.

(Round intermediate calculations to 6 decimal places, e.g. 1.251247 and final answer to 0 decimal places, e.g. 38,548.)

Reference no: EM131806902

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