The Designer Company issued 10-year bonds on January 1. The 6% bonds have a face value of $790,000 and pay interest every January 1 and July 1. The bonds were sold for $656,577 based on the market interest rate of 7%. Designer uses the effective interest method to amortize bond discounts and premiums. On July 1 of the first year, Designer should record interest expense (round to the nearest dollar) of a.$23,700 b.$27,650 c.$19,697 d.$22,980
The Designer Company issued 10-year bonds on January 1. The 6% bonds have a face value of $790,000 and pay interest every January 1 and July 1. The bonds were sold for $656,577 based on the market interest rate of 7%. Designer uses the effective interest method to amortize bond discounts and premiums. On July 1 of the first year, Designer should record interest expense (round to the nearest dollar) of a.$23,700 b.$27,650 c.$19,697 d.$22,980
Cornerstones of Financial Accounting
4th Edition
ISBN:9781337690881
Author:Jay Rich, Jeff Jones
Publisher:Jay Rich, Jeff Jones
Chapter9: Long-term Liabilities
Section: Chapter Questions
Problem 15MCQ
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The Designer Company issued 10-year bonds on January 1. The 6% bonds have a face value of $790,000 and pay interest every January 1 and July 1. The bonds were sold for $656,577 based on the market interest rate of 7%. Designer uses the effective interest method to amortize bond discounts and premiums. On July 1 of the first year, Designer should record interest expense (round to the nearest dollar) of
a.$23,700
b.$27,650
c.$19,697
d.$22,980
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