What is the amount of interest expense for the first semiannual interest period?

Accounting
Tutor: None Selected Time limit: 1 Day

company issued 7%, 5-year bond with par value of $100,000. Market rate of bonds issued was 7.5%. the company recieved $97,947 cash.Use effective interest method

May 18th, 2015

Dr Cash $97,947
Dr Bonds discount $2,053
Cr Bonds payable $100,000

The interest expense for the 1st semiannual interest is = carrying value of the bond x 0.0375* = $97,947 x 0.0375 = $3,673.01.

*0.0375 is half of mkt rate of 7.5%. Half cos it's semiannual.

The journal entry for the 1st semiannual interest payment wld be:
Dr Interest expense $3,673.01
Cr Bonds discount $173.01
Cr Cash $3,500.00 ................................................give me star

May 18th, 2015

wow! thank you so much! I have a few more questions if you're interested in helping me? my friend and i are lost on these last few

May 18th, 2015

yeah sure plz give me 5 stars..and put the questions i will bid then accept

May 18th, 2015

I just rated you five stars. 


Company borrowed 50,000 cash from bank, signed 6 year note at 7%. Present value of an annuity for 6 years at 7% is 4.7665. Annual annuity payments equal $10,490. present value of the loan is:

May 18th, 2015

what amount u will pay me??

May 18th, 2015

$1

May 18th, 2015

$3.00 for both

May 18th, 2015
  50,000 / 4.7665 = $10,489.79<<assuming annual payments and full amortization

5s tar ............................

May 18th, 2015

ok I want to pay you to answer 4 more questions plus the 2 you just gave me. How do I pay you?

May 18th, 2015

so $9 all together

May 18th, 2015
The present value of the $ 50,000 loan IS $ 50,000 , because the company received that money NOW.

I don't see where the concept of annuity payments comes into play.
[That's where the $ 62,940 is coming from : ( $ 10,490 x 6 ) = $ 62,940 ]

---------
The total interest on the loan will be

[ $ 50,000 x 0.07 x 6 ] = $ 21,000

or

( $ 21,000 / 6 ) = $ 3,500 per year.

? ยท 3 years ago

this is rite ans ...............pay me 3$


May 18th, 2015

10$

May 18th, 2015

also give me stars

May 18th, 2015

ok 10 works. where do I pay

May 18th, 2015

place ans and i will bid acept my bid..............understand??

May 18th, 2015

are u there??

May 18th, 2015

u pay me last questins money??

May 18th, 2015

I'm trying to figure it out. How to pay u

May 18th, 2015

you dont know how to place a bid??

May 18th, 2015

no I literally just signed up on here 10 minutes ago

May 18th, 2015

place all questions at a time

May 18th, 2015

thats the way u have done place questions i will bid and accept my bid

May 18th, 2015

Did you know? You can earn $20 for every friend you invite to Studypool!
Click here to
Refer a Friend
...
May 18th, 2015
...
May 18th, 2015
Mar 24th, 2017
check_circle
Mark as Final Answer
check_circle
Unmark as Final Answer
check_circle
Final Answer

Secure Information

Content will be erased after question is completed.

check_circle
Final Answer