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On January 1, 2006, Beulah Grace Benny Co. sold 12% bonds with a face value of $500,000. The bonds mature in five years, and interest is paid semiannually on June 30 and December 31. The bonds were sold for $538,500 to yield 10%. Using the effective interest method of amortization, interest expense for 2006 is: $53,696. $53,850. $50,000. $60,000.

On January 1, 2006, Beulah Grace Benny Co. sold 12% bonds with a face value of $500,000. The bonds mature in five years, and interest is paid semiannually on June 30 and December 31. The bonds were sold for $538,500 to yield 10%. Using the effective interest method of amortization, interest expense for 2006 is: $53,696. $53,850. $50,000. $60,000.

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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On January 1, 2006, Beulah Grace Benny Co. sold 12% bonds with a face value of $500,000. The bonds mature in five years, and interest is paid semiannually on June 30 and December 31. The bonds were sold for $538,500 to yield 10%. Using the effective interest method of amortization, interest expense for 2006 is: $53,696. $53,850. $50,000. $60,000.
Transcribed Image Text:On January 1, 2006, Beulah Grace Benny Co. sold 12% bonds with a face value of $500,000. The bonds mature in five years, and interest is paid semiannually on June 30 and December 31. The bonds were sold for $538,500 to yield 10%. Using the effective interest method of amortization, interest expense for 2006 is: $53,696. $53,850. $50,000. $60,000.
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