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Huskey Mining Corporation issued bonds with a par value of $107,000 on January 1, 2023. The annual contract rate on the bonds is 10.00 %, and the interest is paid semiannually. The bonds mature after three years. The annual market interest rate at the date of issuance was 12.00 %, and the bonds were sold for $101,738. a. What is the amount of the original discount on these bonds? b. How much total bond interest expense will be recognized over the life of these bonds? (Do not round intermediate calculations. Round the final answer to the nearest whole dollar.) c. Present an amortization table for these bonds; use the effective interest method of allocating the interest and amortizing the discount. (Do not round intermediate calculations. Round the final answers to the nearest whole dollar. Enter all the amounts as positive values.)

Huskey Mining Corporation issued bonds with a par value of $107,000 on January 1, 2023. The annual contract rate on the bonds is 10.00 %, and the interest is paid semiannually. The bonds mature after three years. The annual market interest rate at the date of issuance was 12.00 %, and the bonds were sold for $101,738. a. What is the amount of the original discount on these bonds? b. How much total bond interest expense will be recognized over the life of these bonds? (Do not round intermediate calculations. Round the final answer to the nearest whole dollar.) c. Present an amortization table for these bonds; use the effective interest method of allocating the interest and amortizing the discount. (Do not round intermediate calculations. Round the final answers to the nearest whole dollar. Enter all the amounts as positive values.)

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Huskey Mining Corporation issued bonds with a par value of $107,000 on January 1, 2023. The annual contract rate on the bonds is 10.00 %, and the interest is paid semiannually. The bonds mature after three years. The annual market interest rate at the date of issuance was 12.00%, and the bonds were sold for $101,738. a. What is the amount of the original discount on these bonds? b. How much total bond interest expense will be recognized over the life of these bonds? (Do not round intermediate calculations. Round the final answer to the nearest whole dollar.) c. Present an amortization table for these bonds; use the effective interest method of allocating the interest and amortizing the discount. (Do not round intermediate calculations. Round the final answers to the nearest whole dollar. Enter all the amounts as positive values.)
Transcribed Image Text:Huskey Mining Corporation issued bonds with a par value of $107,000 on January 1, 2023. The annual contract rate on the bonds is 10.00 %, and the interest is paid semiannually. The bonds mature after three years. The annual market interest rate at the date of issuance was 12.00%, and the bonds were sold for $101,738. a. What is the amount of the original discount on these bonds? b. How much total bond interest expense will be recognized over the life of these bonds? (Do not round intermediate calculations. Round the final answer to the nearest whole dollar.) c. Present an amortization table for these bonds; use the effective interest method of allocating the interest and amortizing the discount. (Do not round intermediate calculations. Round the final answers to the nearest whole dollar. Enter all the amounts as positive values.)
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