Marquee Co issued $4,000,000 of 12% bonds on April 1, 2013, due on April 1, 2018. The interest is to be paid twice a year on April 1 and October 1. The bonds were sold to yeild 10% effective annual interest. Marquee Co closes its books annually on December 31.
A. Calculate the issuing price of the bonds.
B. Prepare the journal entried for 2013 using the effective-interest method.
C. Compute the interest expense to be reported in the income statement for the year ended, December 31, 2013.