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The notes to the ThorsonLtd. financial statements reported the following data on December 31, Year...

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Accounting

The notes to the ThorsonLtd. financial statements reported the following data on December 31, Year 1 (end of the fiscal year):

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Thorson amortizes bond discounts using the effective-interest method and pays all interest amounts at December 31.

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Requirement 1. Assume the market interest rate is 6% on January 1 of year 1, the date the bonds are issued. (Round your answers to the nearest whole dollar.)

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Requirement 2. Prepare an amortization table through December 31, Year 4 for the bonds. (Round all amounts to the nearest dollar.) How much is Thorson's interest expense on the bonds for the year ended December 31, Year 4?

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Requirement 3. Show how Thorson would report these bonds and notes at December 31, Year 4.

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Note 6. Indebtedness Bonds payable, 1% due on December 31, Year 8 Less: Discount Notes payable, 6%, payable in $45,000 annual $3,500,000 installments starting in Year 5 270,000

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