Compute Bond Proceeds, Amortizing Premium by Interest Method, and Interest Expense
Evans Co. produces and sells motorcycle parts. On the first day of its fiscal year, Evans Co. issued $50,000,000 of five-year, 14% bonds at a market (effective) interest rate of 12%, with interest payable semiannually. Compute the following:
a. The amount of cash proceeds from the sale of the bonds. Use the tables of present values in Exhibits 4 and 5. Round to the nearest dollar.
The amount of premium to be amortized for the first semiannual interest payment period, using the interest method. Round to the nearest dollar.
$
c. The amount of premium to be amortized for the second semiannual interest payment period, using the interest method. Round to the nearest dollar.
$
d. The amount of the bond interest expense for the first year. Round amounts to the nearest dollar.
$