On 2 January 2014, Mahoney Sales Issued $10 000 in Debentures

question 102

Multiple Choice

On 2 January 2014, Mahoney Sales issued $10 000 in debentures for $9 400. They were 5- year debentures with a stated rate of 4%, and pay half- yearly interest payments. Mahoney Sales uses the straight- line method to amortise the debenture discount. On 30 June 2014, when Mahoney makes the first payment to debenture holders, how much will they report as interest expense?

• A)$260
• B)$200
• C)$400
• D)$60

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Definitions:

Cationic Polymerization

A type of polymerization where the growing polymer chain carries a positive charge, often initiated by an electrophilic compound.

Benzoyl Peroxide

Benzoyl peroxide is an organic compound used primarily as an acne treatment, known for its antibacterial properties, with the formula (C6H5CO)2O2.

Free-radical Polymerization

A method of polymerization where a polymer forms by the successive addition of free-radical building blocks.

Styrene

A colorless liquid that is used in the manufacture of polystyrene plastics, rubber, and resins.