Question - Buckman Corporation issued bonds with a face value of $800,000 on April 1, 2008. The bonds pay interest semi-annually at a coupon rate of 10% per year and the due date of the bonds is April 1, 2014. The market rate is 8% per year.
a. Record the amortization of the premium/discount using the straight -line method.
b. Explain why the amounts for premium/ discount recorded under the two methods (straight-line versus effective interest) are different.
c. Record the retirement of the bonds on June 30, 2012 using the straight-line method.