Flounder Inc. Use the Information Provided for Flounder Inc. to Answer the to Answer

question 50

Multiple Choice

Flounder Inc.
Use the information provided for Flounder Inc. to answer the question(s) using the effective interest method.
On January 1, 2012, Flounder Inc. issued $800,000, 10-year, 9% bonds for $662,356. The bonds pay interest on June 30 and December 31. The market rate is 12%.
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Refer to the information provided for Flounder Inc. What is the carrying value of the bonds at the end of the ten years before the final maturity payment is made?

• A) $800,000
• B) $662,356
• C) $137,643
• D) $0

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Definitions:

Direct Expenses

Costs that can be directly tied to the production of specific goods or services, such as raw materials and labor.

Indirect Expenses

Costs that are not directly attributable to a specific cost object, such as a product or department, including utilities, rent, and administrative salaries.

Administrative Costs

Expenses related to the general operation of a business, including salaries of executive officers, legal and clerical work, and office supplies.

Maintenance Expenses

Costs incurred to keep an asset in working condition or to maintain its operational efficiency.