Your answer is partially correct. Try again. Presented below are three independe

Question

Your answer is partially correct. Try again. Presented below are three independent situations. (a) Tamarisk Co. sold $1,820,000 of 12%, 10-year bonds at 104 on January 1, 2017. The bonds were dated January 1, 2017, and pay interest on July and January 1, If Tamarisk uses the straight-line method to amortize bond premium or discount, determine the amount of interest expense to be reported on July 1, 2017, and December 31, 2017. (Round answer to 0 decimal places, e.g. 38,548 Interest expense to be recorded 105560 (b) Vaughn Inc. issued $610,000 of 8%, 10-year bonds on June 30, 2017, for $470,064. This price provided a yield of 12% on the bonds. Interest is payable semiannually on December 31 and June 30. If Vaughn uses the effective-interest method, determine the amount of interest expense to record if financial statements are issued on October 31, 2017. (Round intermediate calculations to 6 decimal places, e.g. 1.251247 and final answer to O decimal places,e.g. 38,548.) Interest expense to be recorded 56637

Explanation / Answer

(B)

Interest expense to be recorded when the financial statements are issued on October 31, 2017, is as calculated below:

Carrying value of bond multiplied by effective interest rate for 4 months

$470,064*12%*4/12 = $18,803

So, Interest expense to be recorded will be $18,803.

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