Question

The Merchant Company issued 10-year bonds on January 1. The 15% bonds have a face value of $100,000 and pay interest every January 1 and July 1. The bonds were sold for $117,205 based on the market interest rate of 12%. Merchant uses the effective interest method to amortize bond discounts and premiums. On July 1 of the first year, Merchant should record interest expense (round to the nearest dollar) of:__________.
a) $7,032
b) $8,790
c) $14,065
d) $7,500

Answer 1

Answer:

c) $14,065

Explanation:

Because I said so