Question 25 20 pts On January 1 of Year 1, Congo Express Airways issued $3,500,000 of 7% bonds that pay interest semiannually on January 1 and July 1. The bond issue price is $3,197,389 and the market rate of interest for similar bonds is 8%. The bond premium or discount is being amortized at a rate of $10,087 every six months. After accruing interest at year end, the company's December 31, Year 1 balance sheet should reflect total liabilities associated with the bond issue (including interest) in the amount of: $3,340,063. $3,902,500. $3,780,000. $3,217,563. ○ $3,782,437.

Cornerstones of Financial Accounting
4th Edition
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Publisher:Jay Rich, Jeff Jones
Chapter9: Long-term Liabilities
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Question 25
20 pts
On January 1 of Year 1, Congo Express Airways issued $3,500,000 of 7% bonds that pay
interest semiannually on January 1 and July 1. The bond issue price is $3,197,389 and the
market rate of interest for similar bonds is 8%. The bond premium or discount is being
amortized at a rate of $10,087 every six months. After accruing interest at year end, the
company's December 31, Year 1 balance sheet should reflect total liabilities associated
with the bond issue (including interest) in the amount of:
$3,340,063.
$3,902,500.
$3,780,000.
$3,217,563.
○ $3,782,437.
Transcribed Image Text:Question 25 20 pts On January 1 of Year 1, Congo Express Airways issued $3,500,000 of 7% bonds that pay interest semiannually on January 1 and July 1. The bond issue price is $3,197,389 and the market rate of interest for similar bonds is 8%. The bond premium or discount is being amortized at a rate of $10,087 every six months. After accruing interest at year end, the company's December 31, Year 1 balance sheet should reflect total liabilities associated with the bond issue (including interest) in the amount of: $3,340,063. $3,902,500. $3,780,000. $3,217,563. ○ $3,782,437.
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