Question - On January 2, 2014, Whitcomb Company issued $8,000,000 of their 10-year bonds at 93. The bonds have a stated rate of 4% and the semi-annual interest payments are made each June 30 and December 31. Assume that Wright uses the effective interest method of amortizing the bond discount. Pay attention!! Note that I am asking for interest expense and liability balance for the 2015 financial statements!
Required: Compute the following amounts.
Proceeds from the bond sale.
Effective interest rate (annual).
Amount of each interest payment.
Interest expense recognized for 2015.
Bond liability at December 31, 2015.