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Mrrafil [7]
3 years ago
6

On January 1, Novak Corp. issued $3600000, 14%, 5-year bonds with interest payable on December 31. The bonds sold for $3859546.

The market rate of interest for these bonds was 12%. On the first interest date, using the effective-interest method, the debit entry to Interest Expense is for
Business
1 answer:
Juliette [100K]3 years ago
6 0

Answer:

the debit entry to Interest Expense is $463,145.52

Explanation:

The computation of the debit entry to Interest Expense is given below:

= Bonds carrying value × Market rate of interest

= $3,859,546 × 12%

= $463,145.52

Hence, the debit entry to Interest Expense is $463,145.52

We simply applied the above formula and the same is to be considered

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