Merchant Company issued 10-year bonds on January 1. The 5% bonds have a face value of $796,000 and pay interest every January 1 and July 1. The bonds were sold for $661,564 based on the market interest rate of 6%. Merchant uses the effective interest rate method to amortize bond discounts and premiums. On July 1 of the first year, Merchant should record interest expense (rounded to the nearest dollar) of Oa. $19,900 Ob. $23,880 Oc. $19,847 Od. $16,539
Merchant Company issued 10-year bonds on January 1. The 5% bonds have a face value of $796,000 and pay interest every January 1 and July 1. The bonds were sold for $661,564 based on the market interest rate of 6%. Merchant uses the effective interest rate method to amortize bond discounts and premiums. On July 1 of the first year, Merchant should record interest expense (rounded to the nearest dollar) of Oa. $19,900 Ob. $23,880 Oc. $19,847 Od. $16,539
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Merchant Company issued 10-year bonds on January 1. The 5% bonds have a face value of $796,000 and pay interest every January 1
and July 1. The bonds were sold for $661,564 based on the market interest rate of 6%. Merchant uses the effective interest rate method
to amortize bond discounts and premiums. On July 1 of the first year, Merchant should record interest expense (rounded to the nearest
dollar) of
Oa. $19,900
Ob. $23,880
Oc. $19,847
Od. $16,539
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