Reference no: EM132879159

Problem - Compute bond proceeds, amortizing discount by interest method, and interest expense

Lewis Co. produces and sells aviation equipment. On the first day of its fiscal year, Lewis Co. issued $60,000,000 of five-year, 10% bonds at a market (effective) interest rate of 13%, with interest payable semiannually. Compute the following, presenting figures used in your computations.

a. The amount of cash proceeds from the sale of the bonds.

b. The amount of discount to be amortized for the first semiannual interest payment period, using the interest method. Round to the nearest dollar.

c. The amount of discount to be amortized for the second semiannual interest payment period, using the interest method. Round to the nearest dollar.

d. The amount of the bond interest expense for the first year.