13. On June 30, 2016, Hardy Corporation issued $11.5 million of its 8% bonds for

Question

13.

On June 30, 2016, Hardy Corporation issued $11.5 million of its 8% bonds for $10.4 million. The bonds were priced to yield 10%. The bonds are dated June 30, 2016, and mature on June 30, 2026. Interest is payable semiannually on December 31 and July 1. If the effective interest method is used, by how much should the bond discount be reduced for the six months ended December 31, 2016?

a) $66,500

b) $29,000

c) $60,000

d) $58,500

On June 30, 2016, Hardy Corporation issued $11.5 million of its 8% bonds for $10.4 million. The bonds were priced to yield 10%. The bonds are dated June 30, 2016, and mature on June 30, 2026. Interest is payable semiannually on December 31 and July 1. If the effective interest method is used, by how much should the bond discount be reduced for the six months ended December 31, 2016?

a) $66,500

b) $29,000

c) $60,000

d) $58,500

Explanation / Answer

c) $60000, the bond discount will be reduced.

A B C D E F G               $ Date Interest Payment @4% Interest expenses at 5%*G Amortization of Bond C-B cr, balance in the a/c Bond Premiun a/c Credit balance in the Bond payable Carrying value of Bond F-E Credit cash Debit Interest Expense Bond Discount Jan,30 2016 1100000 11500000 10400000 Dec 31,2016 460000 520000    60000 1160000 11500000 10340000

Related Questions

Navigate

• Browse (All)
• Browse 1
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.