Renfro Company issued $500,000 of 8%, 10-year bonds at $534,960. Interest is paid annually, and the effect interest method is used for amortization. Assume that the market rate for similar investments is 7%. The bonds are issued on the date of the bonds.
a. What amount was received for the bonds?
b. Calculate how much interest is paid each interest period.
c. Calculate how much bond interest expense is recorded on the first interest date rounded to the nearest dollar.
d. What is the premium amortization for the first interest period rounded to the nearest dollar?
e. What is the carrying value of the bonds after the first interest period?