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Red Company issued a 4% $100,000 5-year bond for $92,000 on January 1, 2021. The...

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Accounting

Red Company issued a 4% $100,000 5-year bond for $92,000 on January 1, 2021. The market rate for this type of bond is 6%. The bond pays interest semi-annually on June 30 & December 31.

Using the information provided above-

  1. What is the total interest expense for this bond on June 30, 2021 assuming that Red Company uses the effective interest method of amortization?
  2. What is the total interest expense for this bond on December 31, 2021 assuming that Red Company uses the effective interest method of amortization?
  3. What is the carrying value of the bond on December 31, 2021 assuming Red company uses the straight-line method of amortization?
  4. What is the total interest expense for the bond at June 30, 2021 assuming Red company uses the straight-line method of amortization?
  5. What is the carrying value of the bond on December 31, 2024 assuming Red company uses the straight-line method of amortization?
  6. What is the total interest expense over the life of this bond assuming the straight-line method of amortization?

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