not sure

[stampmagnet]

Hello,

I got this problem:

LO3 LO5 Straight-Line Method

E 9. DNA Corporation issued $4,000,000 in 10.5 percent, ten-year bonds on February 1, 2010, at 104. Semiannual interest payment dates are January 31 and July 31. Use the straight-line method and ignore year-end accruals.

And I got these questions:

2. With regard to the bond interest payment on July 31, 2010:

a. How much cash is paid in interest?

b. How much is the amortization?

c. How much is interest expense?

3. With regard to the bond interest payment on January 31, 2011:

a. How much cash is paid in interest?

b. How much is the amortization?

c. How much is interest expense?

But I am not sure how to do this. I asked the tutor and she said the answers would be the same for both but she wasn't sure how to do that.

 

[Triest123]

2. With regard to the bond interest payment on July 31, 2010:

a. How much cash is paid in interest?
=> $4,000,000 x 10.5% x 6/12 months
= $210,000

b. How much is the amortization?
=> [($4,000,000 x 4%) / 10 years] x 1/2
= $8,000

c. How much is interest expense?
=> $210,000 - $8,000 = $202,000

3. With regard to the bond interest payment on January 31, 2011:
a. How much cash is paid in interest?
b. How much is the amortization?
c. How much is interest expense?

=> The answers are same as question 2

 

[stampmagnet]

thanks i appreciate it.