A corporation issues $100,000, 8%, 5-year bonds on January 1, 2010, for $104,200

Question

A corporation issues $100,000, 8%, 5-year bonds on January 1, 2010, for $104,200. Interest is paid annually on January 1. If the corporation uses the straight – line method of amortization of bond premium, the amount of interest expense to be recognized in December31, 2010’s adjusting entry is A corporation issues $100,000, 8%, 5-year bonds on January 1, 2010, for $104,200. Interest is paid annually on January 1. If the corporation uses the straight – line method of amortization of bond premium, the amount of interest expense to be recognized in December31, 2010’s adjusting entry is A corporation issues $100,000, 8%, 5-year bonds on January 1, 2010, for $104,200. Interest is paid annually on January 1. If the corporation uses the straight – line method of amortization of bond premium, the amount of interest expense to be recognized in December31, 2010’s adjusting entry is

Explanation / Answer

Amortization pf premium (104200-100000)/5 840 Per year Interest 100000*8% 8000 Interest Expenses $ 8000-$ 840 $7,160 The amount of Interest Expenses to be recognised is $ 7160

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