Presented below are two independent situations. (a) Novak Co. sold $2,080,000 of 12%, 10-year bonds at 105 on January 1, 2020. The bonds were dated January 1, 2020, and pay interest on July 1 and January 1. If Novak uses the straight-line method to amortize bond premium or discount, determine the amount of interest expense to be reported on July 1, 2020, and December 31, 2020. (Round answer to 0 decimal places, e.g. 38,548.) Interest expense to be recorded $ (b) Splish Inc. issued $590,000 of 9%, 10-year bonds on June 30, 2020, for $488,488. This price provided a yield of 12% on the bonds. Interest is payable semiannually on December 31 and June 30. If Splish uses the effective-interest method, determine the amount of interest expense to record if financial statements are issued on October 31, 2020. (Round intermediate calculations to 6 decimal places, e.g. 1.251247 and final answer to 0 decimal places, e.g. 38,548.) Interest expense to be recorded
Presented below are two independent situations.
(a) Novak Co. sold $2,080,000 of 12%, 10-year bonds at 105 on January 1, 2020. The bonds were dated January 1, 2020, and pay interest on July 1 and January 1. If Novak uses the straight-line method to amortize bond premium or discount, determine the amount of interest expense to be reported on July 1, 2020, and December 31, 2020. (Round answer to 0 decimal places, e.g. 38,548.)
Interest expense to be recorded
$
(b) Splish Inc. issued $590,000 of 9%, 10-year bonds on June 30, 2020, for $488,488. This price provided a yield of 12% on the bonds. Interest is payable semiannually on December 31 and June 30. If Splish uses the effective-interest method, determine the amount of interest expense to record if financial statements are issued on October 31, 2020. (Round intermediate calculations to 6 decimal places, e.g. 1.251247 and final answer to 0 decimal places, e.g. 38,548.)
Interest expense to be recorded
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