On January 1 of Year 1, Congo Express Airways issued $3,400,000 of 7% bonds that pay interest semiannually on January 1 and July 1. The bond issue price is $3,100,000 and the market rate of interest for similar bonds is 8 %. The bond premium or discount is being amortized at a rate of $10,000 every six months. The amount of interest expense recognized by Congo Express Airways on the bond issue in Year 1 would be: Multiple Choice $272,000. $129,000. $238,000. $218,000. $258,000.

Principles of Accounting Volume 1
19th Edition
ISBN:9781947172685
Author:OpenStax
Publisher:OpenStax
Chapter13: Long-term Liabilities
Section: Chapter Questions
Problem 4EB: Chung Inc. issued $50,000 of 3-year bonds on January 1, 2018, with a stated rate of 4% and a market...
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On January 1 of Year 1, Congo Express Airways issued $3,400,000 of 7% bonds that pay interest semiannually on January 1 and July 1. The bond issue price is $3,100,000 and the market rate of interest for similar bonds is 8 %. The bond premium or
discount is being amortized at a rate of $10,000 every six months. The amount of interest expense recognized by Congo Express Airways on the bond issue in Year 1 would be: Multiple Choice $272,000. $129,000. $238,000. $218,000. $258,000.
Transcribed Image Text:On January 1 of Year 1, Congo Express Airways issued $3,400,000 of 7% bonds that pay interest semiannually on January 1 and July 1. The bond issue price is $3,100,000 and the market rate of interest for similar bonds is 8 %. The bond premium or discount is being amortized at a rate of $10,000 every six months. The amount of interest expense recognized by Congo Express Airways on the bond issue in Year 1 would be: Multiple Choice $272,000. $129,000. $238,000. $218,000. $258,000.
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