On January 2, 2013, this company issued 1,000,000, 10-year bonds for $1,150,000.

Question

On January 2, 2013, this company issued 1,000,000, 10-year bonds for $1,150,000. The bonds pay interest on June 30 and December 31. The stated rate is 10% and the market rate is 8%. The company plans to use the effective interest method of amortizing bond discounts and premiums.

Refer to Kalahari Limited. The interest expense on the bonds at June 30, 2013 is:

On January 2, 2013, this company issued 1,000,000, 10-year bonds for $1,150,000. The bonds pay interest on June 30 and December 31. The stated rate is 10% and the market rate is 8%. The company plans to use the effective interest method of amortizing bond discounts and premiums.

Explanation / Answer

ANS: B1,150,000 (carrying value).08 (market rate)6/12 = $46,000

Related Questions

Navigate

• Browse (All)
• Browse O
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.