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Amount of discount or premium amortization

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Reference no: EM13132234

Grider Industries, Inc. issued $6,000,000 of 8% debentures on November 1, 2010. The bonds pay interest semiannually on May 1 and November 1. The maturity date on these bonds is November 1, 2020. The firm uses the effective-interest method of amortizing discounts and premiums. The bonds were sold to yield an effective-interest rate of 10%.

a. Calculate the present value of the debentures

b. Calculate the total dollar amount of discount or premium amortization during the first year (5/1/10 through 4/30/11) these bonds were outstanding. (Show computations and round to the nearest dollar.)

Reference no: EM13132234

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