Use the Present Value and Future Value Tables Included in Appendix

question 35

Multiple Choice

Use the present value and future value tables included in Appendix 8 and on the textbook companion website.
- Riverview County issued a $500,000, 10 percent, 10-year bond on January 1, 2012, for 113.6 when the effective interest rate was 8 percent. Interest is payable on June 30 and December 31. Riverview uses the effective-interest method to amortize all premiums and discounts. How much interest expense should Riverview record on December 31, 2012?

• A) $25,000.00
• B) $23,810.15
• C) $22,628.80
• D) $19,920.10

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Definitions:

Plant Assets

Fixed, tangible assets used in the operation of a business, such as machinery, buildings, and equipment, that have a useful life of more than one year.

Land Improvements

Enhancements made to land, such as landscaping, driveways, fences, and sidewalks, that increase the property's value.

Subdivisions

In real estate, this refers to the act of dividing land into pieces that are easier to sell or otherwise develop.

Cash Discount

A reduction in the price paid for goods or services offered to customers as an incentive for early payment.