Question

Question 7 (1 point) On January 1st, 2016, Whale Boats Co. issued a 9 year $800,000 bond with a 5% coupon rate paid quarterly on March 31st, June 30th, September 30th, and December 31st for $680,000. Whale Boats Co. records interest quarterly. What is the discount amortization recorded by the firm on March 31st, 2016 (if no discount is recorded answer O)? Assume a straight-line method of amortizing the discount. Your Answer: Answer Question 8 (1 point) On January 1st, 2016, Whale Boats Co. issued a 9 year $690,000 bond with a 6% coupon rate paid quarterly on March 31st, June 30th, September 30th, and December 31st for $880,000. Whale Boats Co. records interest quarterly. What is the discount recorded by the firm on January 1st, 2016 (if no discount is recorded answer O)? Vou Anemon

Answer 1

The answer has been presented in the supporting sheet. All the parts has been solved with detailed explanation and calculation. For detailed answer refer to the supporting sheet.

Answer Part 1) Discount amortization recorded on March 31,2016 is = (face value-issue price)/(no. of years " no. of quarter) = (800000-680000)/(9*4) = $3333.33 or we can round off to 0 decimal places = $ 3333 So the correct answer is $ 3333.33 or $ 3333 (rounded off to 0 decimal places) e Part 2) The bond issue price is $ 880000 and face value is $ 690000, it means the bond has been issued at the premium, so their will be no discount recorded on January 1, 2016 Thus the correct answer Discount recorded = $ 0 - For any help please comment in the comment box 3 Thank You