Reference no: EM131881699
Question: 1. On January 1, 2016, Legion Company sold $220,000 of 6% ten-year bonds. Interest is payable semiannually on June 30 and December 31. The bonds were sold for $165,166, priced to yield 10%. Legion records interest at the effective rate. Legion should report bond interest expense for the six months ended June 30, 2016, in the amount of
2. On January 1, 2016, Solo Inc. issued 1,900 of its 9%, $1,000 bonds at 99. Interest is payable semiannually on January 1 and July 1. The bonds mature on January 1, 2026. Solo paid $59,000 in bond issue costs. Solo uses straight-line amortization. The amount of interest expense for the year is:
3. On January 1, 2016, an investor paid $302,000 for bonds with a face amount of $335,000. The stated rate of interest is 9% while the current market rate of interest is 11%. Using the effective interest method, how much interest income is recognized by the investor in 2016 (assume annual interest payments and amortization)?
4. On January 31, 2016, B Corp. issued $500,000 face value, 9% bonds for $500,000 cash. The bonds are dated December 31, 2015, and mature on December 31, 2025. Interest will be paid semiannually on June 30 and December 31. What amount of accrued interest payable should B report in its September 30, 2016, balance sheet?
5. Auerbach Inc. issued 7% bonds on October 1, 2016. The bonds have a maturity date of September 30, 2026 and a face value of $325 million. The bonds pay interest each March 31 and September 30, beginning March 31, 2017. The effective interest rate established by the market was 9%. How much cash interest does Auerbach pay on March 31, 2017?
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