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On January 1, Lightbulbs, Inc. issued 5-year bonds with a $400,000 face value. The bonds have a contract rate of 6% and were issued at 96. What is the bond interest expense on the first semi-annual interest payment date using straight-line amortization? If the interest paid is $4,000 and the premium amortized is $200, how much will go into the interest expense account? a. $3,800 b. $4,200 c. $4,000 d. $0

On January 1, Lightbulbs, Inc. issued 5-year bonds with a $400,000 face value. The bonds have a contract rate of 6% and were issued at 96. What is the bond interest expense on the first semi-annual interest payment date using straight-line amortization? If the interest paid is $4,000 and the premium amortized is $200, how much will go into the interest expense account? a. $3,800 b. $4,200 c. $4,000 d. $0

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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On January 1, Lightbulbs, Inc. issued 5-year bonds with a $400,000 face value. The bonds have a contract rate of 6% and were issued at 96. What is the bond interest expense on the first semi-annual interest payment date using straight-line amortization? If the interest paid is $4,000 and the premium amortized is $200, how much will go into the interest expense account? a. $3,800 b. $4,200 c. $4,000 d. $0
Transcribed Image Text:On January 1, Lightbulbs, Inc. issued 5-year bonds with a $400,000 face value. The bonds have a contract rate of 6% and were issued at 96. What is the bond interest expense on the first semi-annual interest payment date using straight-line amortization? If the interest paid is $4,000 and the premium amortized is $200, how much will go into the interest expense account? a. $3,800 b. $4,200 c. $4,000 d. $0
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