(Determine Proper Amounts in Account Balances) Presented below are three independent situations.
(a) Chinook Corporation incurred the following costs in connection with the issuance of bonds:
(1) Printing and engraving costs, $15,000; (2) legal fees, $49,000, and (3) commissions paid to underwriter, $60,000. What amount should be reported as Unamortized Bond Issue Costs, and where should this amount be reported on the balance sheet?
(b) Mc Entire Co. sold $2,500,000 of 10%, 10-year bonds at 104 on January 1, 2010. The bonds were dated January 1, 2010, and pay interest on July 1 and January 1. If Mc Entire uses the straight-line method to amortize bond premium or discount, determine the amount of interest expense to be reported on July 1, 2010, and December 31, 2010.
(c) Cheriel Inc. issued $600,000 of 9%, 10-year bonds on June 30, 2010, for $562,500. This price provided a yield of 10% on the bonds. Interest is payable semiannually on December 31 and June 30. If Cheriel uses the effective-interest method, determine the amount of interest expense to record if financial statements are issued on October 31, 2010.