During 2014 and 2015, Cook Co. completed the following transactions relating to

Question

During 2014 and 2015, Cook Co. completed the following transactions relating to its bond issue. The company’s fiscal year ends on December 31.

Issued $360,000 of ten-year, 7 percent bonds for $354,000. The semiannual cash payment for interest is due on March 1 and September 1, beginning September 2014.

Recognized interest expense including the amortization of the discount and made the semiannual cash payment for interest.

Recognized interest expense including the amortization of the discount and made the semiannual cash payment for interest.

Recognized interest expense including the amortization of the discount and made the semiannual cash payment for interest.

Recognized accrued interest expense including the amortization of the discount.

1a) Determine the amount of interest expense Cook would report on the income statements for 2014 and 2015

1b) Determine the amount of interest Cook would pay to the bondholders in 2014 and 2015.

During 2014 and 2015, Cook Co. completed the following transactions relating to its bond issue. The company’s fiscal year ends on December 31.

Explanation / Answer

interest payable-43365 =(354000*7%)+(354000*7%)/12*9

for 2014 it will be 18585(354000*7%)/12*9

for 2015 it will be 24780(354000*7%)

b) interest payable=44100 =(360000*7%)+(360000*7%)/12*9

for 2014 it is=18900(360000*7%)/12*9

for 2015= 25200(360000*7%)

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