Exercise 10-4 (Algo) Straight-Line: Amortization of bond discount LO P2Tano Company issues bonds with a par value of $82,000 on January 1, 2021. The bonds' annualcontract rate is 7%, and interest is paid semiannually on June 30 and December 31. The bonds mature inthree years. The annual market rate at the date of issuance is 8%, and the bonds are sold for $79,849.1. What is the amount of the discount on these bonds at issuance?2. How much total bond interest expense will be recognized over the life of these bonds?3. Prepare a straight-line amortization table for these bonds.Complete this question by entering your answers in the tabs below.Required 1 Required 2 Required 3Prepare a straight-line amortization table for these bonds.Note: Round your intermediate calculations to the nearest dollar amount.Semiannual Period-EndUnamortizedCarrying ValueDiscount(0)01/01/2021$2,151 $79,849(1)06/30/202180,208(2)12/31/202180,566(3)06/30/202280,925(4)12/31/202281,283(5)06/30/202335881,642(6)12/31/2023$0$82,000< Required 2Required 3 >

Step 1: Of course! Let's go over the computations one by one:Amount of the discount on these bonds…

Answered: Exercise 10-4 (Algo) Straight-Line:…

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

Chapter9: Long-term Liabilities

Section: Chapter Questions

Problem 99PSA

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Volunteer Inc. issued bonds with a $500,000 face value, 10% interest rate, and a 4-year term on July 1, 2018 and received $540,000. Interest is payable annually. The premium is amortized using the straightline method. Prepare journal entries for the following transactions. A. July 1, 2018: entry to record issuing the bonds B. June 30, 2019: entry to record payment of interest to bondholders C. June 30, 2019: entry to record amortization of premium D. June 30, 2020: entry to record payment of interest to bondholders E. June 30, 2020: entry to record amortization of premium
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