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1. On January 1, 2016, the Legion Company sold $220,000 of 6% ten-year bonds. Interest is payable semi-annually on June 30 and December 31. The bonds sold for $165,166, with a 10% price yield. Legion records interest at the effective rate. What amount does Legion  required to report interest expense on the bonds for the six months ended June 30, 2016?

2. On January 1, 2016, Solo Inc. issued 1,900 of its 9% bonds for $1,000 at 99 Interest is paid semi-annually on January 1 and July 1. The bonds mature on January 1, 2026. You only paid $59,000 in bond issuance costs. It only uses straight-line depreciation. What would be the amount of interest expense for the year?

3. On January 1, 2016, an investor paid $302,000 for bonds with a face value of $335,000. The established interest rate is 9%, while the current market interest rate is 11%. Using the effective interest method, how much interest income does the investor recognize in 2016 (assuming annual interest and amortization payments)?

4. On January 31, 2016, B Corp. issued a $500,000 par value, 9% bond for $500,000 in cash. The notes are dated December 31, 2015 and mature on December 31, 2025. Interest will be paid semi-annually on June 30 and December 31. What amount of accrued interest payable should B report on its balance sheet as of September 30, 2016?

5. Auerbach Inc. issued 7% bonds on October 1, 2016. The bonds have a maturity date of September 30, 2026 and a face value of $325 million. The bonds pay interest every March 31 and September 30, beginning March 31, 2017. The effective interest rate established by the market was 9%. How much cash interest does Auerbach pay on March 31, 2017?

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