On January 1, Thompson Corporation issued $2,750,000, 10%, 4-year bonds for $2,932,167. Interest is payable annually on January 1. The effective interest rate on the bonds is 8%. Use the effective-interest method to determine the amount of interest expense for the first year.
Answer
--Amount of Interest Expense for the first year = $ 2,932,167
carrying value x 8% effective rate
= $ 234,573.36 or $ 234,573
On January 1, Thompson Corporation issued $2,750,000, 10%, 4-year bonds for $2,932,167. Interest is payable annually...
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Interest is paid annually on January 1. If the corporation uses the
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