Problem: The fiscal year ends December 31 for Lake Hamilton Development. To give funding for its Moonlight Bay project, LHD issued nine percent bonds with a face amount of $550,000 on November 1, 2013. The bonds sold for $502,815, a price to yield the market rate of 10%. The bonds mature October 31, 2033 (20 years). Interest is paid semi annually on April 30 and October 31.
1. What amount of interest expenditure related to the bonds will LHD report in its income statement for the year end December 31, 2013?
2. What amount(s) related to the bonds will LHD report in its balance sheet at December 31, 2013?
3. What amount of interest expense related to the bonds will LHD report in its income statement for the year ending December 31, 2014?
4. What amount(s) related to the bonds will LHD report in its balance sheet at December 31, 2014?