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F. Naz
F. Naz, B.Com
Category: Multiple Problems
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Experience:  have completed B.Com and CA Finalist
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I dont know how to solve the accounting problems, i am studying

Customer Question

I dont know how to solve the accounting problems, i am studying for my final..and i got and exercise
Question 1
Calculate the total amount of interest expense over the life of the bonds for the following independent situations.
a) AED100,000 face value, 10%, 10-year bonds issued at 101. (premium)
b) AED240,000 face value, 5%, 5-year bonds issued at 100. (no discount)
c) AED300,000 face value, 9%, 6-year bonds issued at 98. (discount)
Question 2
ABC Corporation issued AED2,000,000 of 10%, 6-year bonds dated July 1, 2011, with semiannual interest payments . The bonds were issued on January 1, 2011, at 97. ABC’s year-end is December 31.
a) Were the bonds issued at a premium, a discount, or at par?
b) Was the market rate of interest higher, lower, or the same as the contract rate of interest?
c) If the company uses the straight-line method of amortization, what is the amount of interest
expense ABC Corporation will show for the year ended December 31, 2011?
Submitted: 2 years ago.
Category: Multiple Problems
Expert:  F. Naz replied 2 years ago. Your answer is at link above, all workings will be shown when you click on the respective cel of the figure, thanks.

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