Question - On June 1, 2001, Janson Bottle Company sold $500,000 in long-term bonds for $428,800. The bonds will mature in 10 years and have a stated interest rate of 8% and a yield rate of 10% (use the 10%). The bonds pay interest annually on May 31 of each year. The bonds are to be accounted for under the effective interest method. (note: I know that the present value doesn't equal $428,800 precisely. That's okay. Just use the $428,800 for your effective interest amortization schedule.)
Determine interest expense for the year ended 5/31/03. (Round to the nearest ten dollars)
Determine net carrying value of the bond liability as of 12/31/03.