Presented below are three independent situations. SEE SCREENSHOT I NEED ANSWERS

ID: 2491592 • Letter: P

Question

Presented below are three independent situations. SEE SCREENSHOT

I NEED ANSWERS FOR a) b) and c)

Exercise 14-8 Presented below are three independent situations. (a) CeCe Winans Corporation incurred the following costs in connection with the issuance of bonds: (1) printing and engraving costs, $13,260; (2) legal fees, $53,630, and (3) commissions paid to underwriter, $68,600 What amount should be reported as Unamortized Bond Issue Costs, and where should this amount be reported on the balance sheet? (Round answer to O decimal places, e.g. 38,548.) Amount to be reported as Unamortized Bond Issue Costs 135490 Unamortized Bond Issue Costs should be reported in Other Asset section of the balance Sheet (b) George Gershwin Co. sold $2,076,000 of 12%, 9-year bonds at 106 on January 1, 2014, The bonds were dated January 1, 2014, and pay interest on July 1 and January 1. If Gershwin uses the straight-line method to amortize bond premium or discount, determine the amount of interest expense to be reported on July 1, 2014, and December 31, 2014. (Round answer to O decimal places, e.g. 38,548.) In Interest expense to be recorded (c) Ron Kenoly Inc. issued $629,300 of 9%, 9-year bonds on June 30, 2014, for $527,096. This price provided a yield of 12% on the bonds. Interest is payable semiannually on December 31 and June 30. If Kenoly uses the effective-interest method, determine the amount of interest expense to record if financial statements are issued on October 31, 2014. (Round answer to O decimal places, e.g. 38,548.) In Interest expense to be recorded

Explanation / Answer

b) premium = 2,076,000 @6% = 124,560

premium amortized = 124,560/18 = 6,920 semiannually

interest paid 2,076,000 @4.5% = 93,420

therefor interest expense = 93,420 – 6920 = $86,500

date

Interest paid

Interest expense

Amortized

527,096

June 30

28,319

31,626

3307

530,403

Interest expense to be recorded for Oct = 530,403@12%*3/12 = $15,912