Ask Question
12 August, 04:23

On January 1, 2019, Tonika Company issued a five-year, $10,000, 8% bond. The interest is payable annually each December 31. The issue price was $9,611 based on an 9% effective interest rate. Tonika uses the effective-interest amortization method. The interest expense on the income statement for the year ended December 31, 2019 is closest to:

+5
Answers (1)
  1. 12 August, 06:19
    0
    So book value at the end of December will be $9676

    Explanation:

    We have given amount of the bond = $10000

    Rate of interest = 8 %

    So interest paid Interest paid = 10000*0.08 = 800

    Issue price = $9611

    Effective interest rate = 9 %

    Interest expense = 9611*0.09 = 865

    Discount amortization = 865-800 = 65

    Book value at the end of December 31,2019 = 9611+65 = 9676
Know the Answer?
Not Sure About the Answer?
Find an answer to your question ✅ “On January 1, 2019, Tonika Company issued a five-year, $10,000, 8% bond. The interest is payable annually each December 31. The issue price ...” in 📘 Business if you're in doubt about the correctness of the answers or there's no answer, then try to use the smart search and find answers to the similar questions.
Search for Other Answers