A company issues $15,000,000, 7.8%, 20-year bonds to yield 8% on January 1, 2020. Interest is...

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A company issues $15,000,000, 7.8%, 20-year bonds to yield 8% on January 1, 2020. Interest is...

A company issues $15,000,000, 7.8%, 20-year bonds to yield 8% on January 1, 2020. Interest is paid on December 31. The proceeds from the bonds are $14,703,108. Using effective-interest amortization, how much interest expense will be recognized in 2020? $585,000 $1,170,000 $1,176,373 $1,176,249

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Answer 1

Answer #1

Answer: Option D $1,176,249

Working: Effective interest method

Interest Expense to be recognized in 2020=carrying value of bonds *8%

Interest Expense for Jan-Jun = $14,703,108 * 8% = $1,176,249

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Answer 2

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