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On June 1, 2001, Janson Bottle Company sold $500,000 in long-term bonds for $428,800. The bonds will mature in 10 years and have a stated interest rate of 8% and a yield rate of 10% (use the 10%). The bonds pay interest annually on May 31 of each year. The bonds are to be accounted for under the effective interest method. (note: I know that the present value doesn't equal $428,800 precisely. That's okay. Just use the $428,800 for your effective interest amortization schedule.)

Determine interest expense for the year ended 5/31/03. (Round to the nearest ten dollars)

Determine net carrying value of the bond liability as of 12/31/03.

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M952212

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