On January 1, 2013 the Mack Company issues $16,000,000 of 11% bonds dated January 1. Interest is payable semiannually on June 30 and December 31. The bonds mature in 4 years. The issue price of the bonds was $16,517,057.02 with no bond issue cost.
Using the effective interest method, how much interest expense should be recognized for the period ending June 30, 2013?
Compute interest expense for the semi-annual period ending December 31, 2015.
Suppose that instead of the effective interest method, the straight line method was used. How much interest expense would be recognized in each period?