Question

On January 1, Year 1, Young Company issued bonds with a face value of $132,000, a...

On January 1, Year 1, Young Company issued bonds with a face value of $132,000, a stated rate of interest of 16 percent, and a 10-year term to maturity. Interest is payable in cash on December 31 of each year. The effective rate of interest was 15 percent at the time the bonds were issued. The bonds sold for $138,625. Young used the effective interest rate method to amortize the bond premium.

Required:

a. Determine the amount of the premium on the day of issue.

b. Determine the amount of interest expense recognized on December 31, Year 1. (Round your answer to the nearest dollar amount.)

c. Determine the carrying value of the bond liability on December 31, Year 1. (Round your answer to the nearest dollar amount.)

A. Premium on the day of issue
B. Interest Expense on December 31, Year 1
C. Carrying Value on December 31, Year 1
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