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How are given bonds reported in long-term liability section

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Reference no: EM131810112

Problem

On December 31, 2012, a company issues 16%, 10-year bonds with a par value of $100,000. Interest is paid on June 30 and December 31. The bonds are sold to yield a 14% annual market rate at an issue price of $110,592. Use this information to answer questions 7 through 9:

1. Are these bonds issued at a discount or a premium? Explain your answer.

2. Using the straight-line method to allocate bond interest expense, the issuer records the second interest payment (on December 31, 2013) with a debit to Premium on Bonds Payable in the amount of (a) $7,470, (b) $530, (c) $8,000, or (d) $400.

3. How are these bonds reported in the long-term liability section of the issuer's balance sheet as of December 31, 2013?

Reference no: EM131810112

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