I need help with a math problem

Anonymous
timer Asked: Nov 19th, 2015
account_balance_wallet $5

Question Description

On January 1, Di Corporation issued $1,000,000 14%, 5-year bonds with interest payable on July 1 and January 1. The bonds sold for $1,098,540. The market rate of interest for these bonds was 12%. On the first interest date, using the effective-interest method, the debit entry to Bond Interest Expense is for

Tutor Answer

anusha_reddy
School: UCLA

Thank you for the opportunity to help you with your question!

On the first interest date , Bond Interest Expense = Bond Carrying value * market rate of interest * 1/2

On the first interest date , Bond Interest Expense = 1098540*12%*1/2

On the first interest date , Bond Interest Expense = $ 65,912.40

Answer

On the first interest date, using the effective-interest method, the debit entry to Bond Interest Expense is for $ 65,912.40


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Anonymous
Good stuff. Would use again.

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