Question 15.( TCO D) On January 1, Patterson, Inc. issued $ 5,000,000, 9 % bonds for $ 4,695,000. The market rate of interest for these bonds is 10 %. Interest is payable annually on December 31. Patterson uses the effective-interest method of amortizing bond discount. At the end of the first year, Patterson should report unamortized bond discount of
$ 274,500 $ 285,500 $ 258,050 $ 255,000
Question 1.( TCO C) Barkley Corp. obtained a trade name in January 2009, incurring legal costs of $ 15,000. The company amortizes the trade name over 8 years. Barkley successfully defended its trade name in January 2010, incurring $ 4,900 in legal fees. At the beginning of 2011, based on new marketing research, Barkley determines that the fair value of the trade name is $ 12,000. Estimated total future cash flows from the trade name are $ 13,000 on January 4, 2011.
Instructions:
Prepare the necessary journal entries for the years ending December 31, 2009, 2010, and 2011. Show all computations.