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):
Thorson amortizes bond discounts using the effective-interest method and pays all interest amounts at December 31.
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.)
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?
Requirement 3. Show how Thorson would report these bonds and notes at December 31, Year 4.
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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