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On January 1, 2019, Company C issues $200,000 of its 6% bonds which mature in 10...

On January 1, 2019, Company C issues $200,000 of its 6% bonds which mature in 10 years. Interest is paid annually on December 31. The market (effective) rate of interest is 4%. If the bond sells as 88.2, what the amount of interest expense reported on the Income Statement for 2019 (hint: prepare an amortization schedule)

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Answer #1

Interest expense for 2019 = $200000 * 88.2% * 4%

= $7056

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