Reference no: EM132791287
Question - Raymond Ltd. issued $1,000,000 of 6.5%, eight-year bonds dated June 1, 2008, with semi-annual interest payments on December 1 and June 1. The bonds were issued on June 1, 2008, at 103 3/8. Raymond Ltd.'s year-end is December 31.
Required -
a) Were the bonds issued at a premium, a discount, or at par, why?
b) Was the market rate of interest higher, lower, or the same as the contract rate of interest?
c) If the company uses the straight-line method of amortization, what is the amount of interest expense Raymond Ltd. will show for the year ended December 31, 2008?
d) What is the carrying value of the bonds on December 31, 2008?
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