Auerbach Inc. issued 6% bonds on october 1, 2016. The bonds have a maturity date

Question

Auerbach Inc. issued 6% bonds on october 1, 2016. The bonds have a maturity date of September 30, 2026 and a face value of $400 million. The bonds pay interest each March 31 and September 30, beginning March 31, 2017. The effective interest rate established by the market was 896. Assuming that Auerbach issued the bonds for $345,639.ooo, what would the company report for its net bond liability balance after its first interest payment on March 31, 2017? O $343,813.440. O $345,639.000. O $347464,560. O $349,290120.

Explanation / Answer

NOte:Note: Using Amortizing Bond Discount with the Effective Interest Rate Method

Face value of Bonds                              400,000,000 Proceeds from issue of bonds                              345,639,000 Discount on issue of bonds                                54,361,000 Interest on bonds(400000000*4%) $16,000,000 Interest on Diconuted value (345639000*4%) $13,825,560 Discount to be amortised $ 2,174,440 Net liability of bond as on march 31st 2017($345,639,000+$2,174,440) $ 347,813,440

Related Questions

Navigate

• Browse (All)
• Browse A
• Subjects

---

---

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