On January 1 of Year 1, Congo Express Airways issued $3,240,000 of 8% bonds that

Question

On January 1 of Year 1, Congo Express Airways issued $3,240,000 of 8% bonds that pay interest semiannual on January, and July 1. The bond issue price is $2,980,000 and the market rate of interest for similar bonds is 9%. The bond premium or discount is being amortized at a rate of $8,667 every six months. After accruing interest at year end, the company's December 31, Year 1 balance sheet should reflect total liabilities associated with the bond issue in the amount of Multiple Choice $3,482,666 $3,612,266 $2,867,734 $2,997,334 $3,126,934.

Explanation / Answer

Total liabilities asscoaited with the bond issue =(2980000+8667+8667)+(3240000*8%/2)= 3126934 Option 5 is correct

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