Newton Corporation sold its $1,000,000, 7% ten-year bonds to the public on January 1, 2011. The bond

 
   

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Newton Corporation sold its $1,000,000, 7% ten-year bonds to the public on January 1, 2011. The bonds pay interest annually, beginning on December 31, 2011. Newton received $1,153,420 in cash at the issuance of the bonds. The market rate of interest when the bonds were sold was 5%.Compute the amount of the premium that Newton Corporation should amortize on December 31, 2011, assuming the “effective-interest†method is used.YearInterest Expense – 5%Interest Paid – 7%PremiumCarrying Value157,67170,00012,3291,153,420Premium: 12,329Interest Expense: 57,671Carrying Value: 1,141,091