Short Answer
On January 1, 2013, O'Hara Co. issued bonds with a face value of $200,000 and a stated interest rate of 10%. The bonds have a life of ten years and were sold at 108. O'Hara uses the straight-line method to amortize bond discounts and premiums. On December 31, 2016, O'Hara called the bonds at 106. Indicate whether each of the following statements is true or false.
_____ a) The interest expense for 2013 was $20,000.
_____ b) The balance in the bonds payable account on December 31, 2016 was $200,000.
_____ c) The carrying value of bonds payable on December 31, 2016 was $209,600.
_____ d) When O'Hara repurchased the bonds, it had to recognize a gain in the amount of $2,400.
_____ e) When O'Hara repurchased the bonds, it had to recognize a loss in the amount of $2,400.
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