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five pe At the beginning of 2017, the Octo Company issued 10% bonds with 2017, the Octo Company issued 10% bonds with a face

please , can I see the calculations of these two exercises . thank you
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Answer #1

Answer to Question 1.
Face Value of the Bond = $3,000,000
Carrying Value of Bond = $2,779,200
Interest Expense = Carrying Value of the Bond * Market Yield Rate
Interest Expense for Year 2017 = $2,779,200 * 12%
Interest Expense for Year 2017 = $333,500

Correct Option: Option A i.e. $333,500

Answer to Question 2.
Face Value of the Bond = $6,000,000
Carrying Value of Bond = $6,810,000
Premium on Issuance of Bonds = $6,810,000 - $6,000,000 = $810,000

Interest Expense = Carrying Value of the Bond * Market Yield Rate
Interest Expense for Year 2018 = $6,810,000 * 8%
Interest Expense for Year 2018 = $544,800

Interest Paid = $6,000,000 * 10%
Interest Paid = $600,000

Premium on Bonds Payable amortized in Year 2018 = $600,000 - $544,800
Premium on Bonds Payable amortized in Year 2018 = $55,200

Unamortized Bonds Premium, December 31, 2018 = $810,000 - $55,200
Unamortized Bonds Premium, December 31, 2018 = $754,800

Correct Option: Option C i.e. $754,800

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