Merchant Company issued 10-year bonds on January 1. The 5% bonds have a face value of $741,000 and pay interest every January 1 and July 1. The bonds were sold for $615,853 based on the market interest rate of 6%. Merchant uses the effective interest rate method to amortize bond discounts and premiums. On July 1 of the first year, Merchant should record interest expense (rounded to the nearest dollar) of Oa. $18,525 Ob. $15,396 Oc. $18,476 Od. $22,230
Merchant Company issued 10-year bonds on January 1. The 5% bonds have a face value of $741,000 and pay interest every January 1 and July 1. The bonds were sold for $615,853 based on the market interest rate of 6%. Merchant uses the effective interest rate method to amortize bond discounts and premiums. On July 1 of the first year, Merchant should record interest expense (rounded to the nearest dollar) of Oa. $18,525 Ob. $15,396 Oc. $18,476 Od. $22,230
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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