ABC Company Received $9,631 for Its 5-Year,10% Bonds with a Total

question 152

Multiple Choice

ABC Company received $9,631 for its 5-year,10% bonds with a total face value of $10,000.The market rate of interest was 11%.The bonds pay interest annually on December 31.Approximately how much interest expense will ABC Corporation record on the first annual interest payment date using the effective-interest method?

• A) $1,059
• B) $1,000
• C) $1,074
• D) $963.10

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Definitions:

Ordovician

A geologic period and system of the Paleozoic Era, occurring around 485 to 444 million years ago, noted for its high levels of marine biodiversity.

Pleistocene

An epoch of the geological time scale, lasting from about 2.6 million to 11,700 years ago, marked by repeated glacial cycles.

Cretaceous

A geological period of the Mesozoic Era, occurring around 145 to 66 million years ago, known for the dominance of dinosaurs and ending with their mass extinction.

Triassic

The first period of the Mesozoic Era, occurring approximately 252 to 201 million years ago, noted for the rise of reptiles and the first dinosaurs.