Devon Harris Company sells 10% bonds having a maturity value of $2,055,000 for $
ID: 2496646 • Letter: D
Question
Devon Harris Company sells 10% bonds having a maturity value of $2,055,000 for $1,906,851. The bonds are dated January 1, 2014, and mature January 1, 2019. Interest is payable annually on January 1.
LINK TO TEXT
Schedule of Discount Amortization
Effective-Interest Method
Year
Cash
Paid
Interest
Expense
Discount
Amortized
Carrying
Amount of Bonds
Devon Harris Company sells 10% bonds having a maturity value of $2,055,000 for $1,906,851. The bonds are dated January 1, 2014, and mature January 1, 2019. Interest is payable annually on January 1.
Explanation / Answer
Effective Interest Rate (r)= (1+i/n)n-1
= (1+10%/1)1-1
= (1+0.1/1)1-1
= 10%
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.