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Paraphin [41]
3 years ago
8

A company issues $25,000,000, 7.8%, 20-year bonds to yield 8% on January 1, 2017. Interest is paid on June 30 and December 31. T

he proceeds from the bonds are $24,505,180. Using effective-interest amortization, how much interest expense will be recognized in 2017? Group of answer choices $1,960,623 $975,000 $1,960,415 $1,950,000
Business
1 answer:
Vladimir [108]3 years ago
3 0

Answer:

  • $1,960,415

Explanation:

  • The bond was issued under this conditions:

$25,000,000     7.8%

Period   Capital   Interest  

2017.I  $25,000.000  $ 975.000

2017.II  $25,000.000  $ 975.000

  • But the market accept under this conditions.

$24,505,180     8%

Period   Capital    Interest  

2017.I  $24,505,181  $ 980,207  

2017.II  $24,505,181  $ 980,207  $1,960,414  

  • The company recognized interes by $1,960,414  
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Answer:

The Journal entries are as follows:

(i) On March 1,

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To common stock (42,500 × $4)               $170,000                      

To paid in capital in excess of par value   $127,500

(To record the issuance of common stock)

(ii) On April 1,

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To common stock                   $70,000  

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To paid in capital in excess of par value   $46,000

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4 0
3 years ago
Compounding frequency refers to?
KonstantinChe [14]
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6 0
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g An increase in supply is represented by Group of answer choices a rightward shift of the supply curve. a leftward shift of the
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Answer:

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The correct answer to this open question is the following.

Although there are no options attached we can say the following.

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Businesses are still business no matter the time in history. They are created to make profits.

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