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Compute the amount of each interest payment

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Reference no: EM132469931

Problem - On January 2, 2014, Falstaff Company issued $10,000,000 of their 10-year bonds. The bonds have a stated rate of 5% and the semi-annual interest payments are made each June 30 and December 31. The bonds were priced to yield 6.5%. Assume that Falstaff uses the effective interest method of amortizing bond discounts and bond premiums. Pay attention!! Note that I am asking for interest expense and liability balance for the 2018 financial statements!

Required - Compute the following amounts.

1. Proceeds from the bond sale.

2. Amount of each interest payment.

3. Interest expense recognized for 2018.

4. Bond liability at December 31, 2018.

Reference no: EM132469931

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