Mcdonaugh Corporation issued $250,000 of 5%, 10-year bonds payable onJanuary 1, 2019. The market interest rate when the bonds were issued was 8%. Interest is paidsemiannually on January 1 and July 1. The first interest payment is July 1, 2019. Using theeffective-interest amortization method, how much interest expense will Mcdonaugh record onJuly 1, 2019? Use Excel to calculate the issue price.a. $4,976b. $7,961c. $1,711d. $10,000e. $6,250
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At the end of the accounting period, a financial statement is prepared by every company, then at that time while preparing the financial statement, the company determines among its total receivable amount how much portion of receivables is collected by the company during that accounting period.
Accounts Receivable
The word “account receivable” means the payment is yet to be made for the work that is already done. Generally, each and every business sells its goods and services either in cash or in credit. So, when the goods are sold on credit account receivable arise which means the company is going to get the payment from its customer to whom the goods are sold on credit. Usually, the credit period may be for a very short period of time and in some rare cases it takes a year.
Mcdonaugh Corporation issued $250,000 of 5%, 10-year bonds payable on
January 1, 2019. The market interest rate when the bonds were issued was 8%. Interest is paid
semiannually on January 1 and July 1. The first interest payment is July 1, 2019. Using the
effective-interest amortization method, how much interest expense will Mcdonaugh record on
July 1, 2019? Use Excel to calculate the issue price.
a. $4,976
b. $7,961
c. $1,711
d. $10,000
e. $6,250
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