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kaheart [24]
3 years ago
11

On January 2, 2017, a calendar-year corporation sold 5% bonds with a face value of $2500000. These bonds mature in five years, a

nd interest is paid semiannually on June 30 and December 31. The bonds were sold for $2292000 to yield 7%. Using the effective-interest method of computing interest, how much should be charged to interest expense in 2017?
Business
1 answer:
Oksanka [162]3 years ago
3 0

Answer:

Consider the following explanation

Explanation:

Under Effective interest method, Interest calculated at the effective interest rate (i.e., the yield of the bond) is charged as an expense annually, and the payment made basis the Coupon rate.

In the given case, interest to be paid semi annually i.e, on June 30 and on December 31, will be $62,500 (i.e., 2,500,000 * 5% * 6/12).

On the basis of above, the interest expense to be charged in the 2017 can be calculated as follows: take a look to the attached archive.

As calculated above, the amount to be charged as interest expense for the year 2017 is (80,220 + 80,840 i.e.,) $ 161,060.

Download xlsx
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Answer:

The answer is C.

Explanation:

Current ratio shows the liquidity of of a company. This ratio tells us how a company or business is able to meet its short obligation.

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3 0
3 years ago
The accounts receivable account has a beginning balance of $10,000 and the company provides services of $50,000 on account durin
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You are comparing three investments, all of which pay $100 a month and have an interest rate of 8 percent. One is ordinary annui
Ivan

Answer:

c. The present value of the perpetuity has to be higher than the present value of either the ordinary annuity or the annuity due

Explanation:

Considering the following statements:

  • the ordinary perpetuity, the payments must occur on the first day of each monthly period. Hence this statement is incorrect.
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