Determine whether the bonds sold at face value

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Question 1:

For each of the following independent situations, determine (1) whether the bonds sold at face value, a premium, or at a discount, and (2) whether interest expense recognized each year for the bonds was less than, equal to, or greater than the amount of interest paid on the bonds.

a. Bonds with a stated rate of 10 percent were sold to yield an effective rate of 8 percent.

b. Bonds with a stated rate of 7 percent were sold to yield an effective rate of 7 percent.

c. Bonds with a stated rate of 6 percent were sold to yield an effective rate of 11 percent.

Reference no: EM13490148

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