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Sladkaya [172]
3 years ago
11

On January 1 of the current year, Barton Corporation issued 10% bonds with a face value of $200,000. The bonds are sold for $191

,000. The bonds pay interest semiannually on June 30 and December 31, and the maturity date is December 31, five years from now. Barton records straight-line amortization of the bond discount. The bond interest expense for the year ended December 31 isa. $21,800
b. $10,900
c. $18,200
d. $29,000
Business
1 answer:
Verdich [7]3 years ago
5 0

Answer:

a. $21,800

Explanation:

The discoun of issuance of the bond is amortized over the period until maturity. Total Interest expesne on a discounted bond is the sum of the coupon payment and the amortization of the discount amount.

Coupon payment = $200,000 x 10% = $20,000 per year

Discount on the bond = $200,000 - $191,000 = $9,000

Discount amotized per year = $9,000 / 5 = $1,800

Total Interest Expense = Coupon Payment + Amortization of Discount

Total Interest Expense = 20,000 + 1800 = $21,800

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EOQ= 300 units

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The Economic Order Quantity (EOQ) is the order size that minimizes the balance of ordering cost and holding cost. At the EOQ, the carrying cost is equal to the holding cost.

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Answer:

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