On January 1, 2009 Frank Corporation Issued a 3-Year, 9

question 62

Essay

On January 1, 2009 Frank Corporation issued a 3-year, 9%, $5,000 bond payable. Beginning in 2010, interest is payable every January 1 over the life of the bond. The market rate of interest on January 1, 2009 is 6% when the bonds were issued at 108. Calculate the total interest expense over the 3-year life of the bond independent of the particular accounting method used to recognize interest expense each year.

---

Definitions:

Oral Agreement

An agreement made verbally without written documentation, enforceable only under specific circumstances and often harder to prove.

Infant

In legal terms, refers to a person who is under the age of majority, and thus limited in their legal capacity to contract or make decisions.

Defame

To damage someone's reputation, name, or character through false and malicious statements.

Guarantee

A formal pledge to ensure the fulfillment of a contract or the performance of an obligation, sometimes by providing a replacement or repair in case of default.