On January 1 of Year 1, Congo Express Airways issued $3,770,000 of 7% bonds that
ID: 2555241 • Letter: O
Question
On January 1 of Year 1, Congo Express Airways issued $3,770,000 of 7% bonds that pay interest semiannually on January 1 and July 1. The bond issue price is $3,440,000 and the market rate of interest for similar bonds is 8%. The bond premium or discount is being amortized at a rate of $11,000 every six months.
The amount of interest expense recognized by Congo Express Airways on the bond issue in Year 1 would be:
$285,900.
$263,900.
$241,900.
$142,950.
$301,600.
On January 1 of Year 1, Congo Express Airways issued $3,770,000 of 7% bonds that pay interest semiannually on January 1 and July 1. The bond issue price is $3,440,000 and the market rate of interest for similar bonds is 8%. The bond premium or discount is being amortized at a rate of $11,000 every six months.
The amount of interest expense recognized by Congo Express Airways on the bond issue in Year 1 would be:
Explanation / Answer
A. $285,900
Interest payable for Year 1($3,770,000 * 7%) $263,900 Discount amoritzed($11,000 * 2) $22,000 Interest expense recognized $285,900Related Questions
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