1.The following data relate to a $200,000,000, 5% bond issued for a selected semiannual interest period:
Bond carrying amount at beginning of period $216,221,792
Interest paid during the period 5,000,000
Interest expense allocable to the period 4,864,990
(a) Were the bonds issued at a discount or a premium?
(b) What is the unamortized amount of the discount or premium account at the beginning of the period?
(c) What account was debited to amortize the discount or premium?
2. Bonds Payable has a balance of $3,500,000 and Discount on Bonds Payable has a balance of $125,000. If the issuing corporation redeems the bonds before the maturity date at 97, is there a gain or a loss on the bond redeemption? How much of a gain or a loss?