A Company Issued 5-Year, 7% Bonds with a Par Value

question 114

Multiple Choice

A company issued 5-year, 7% bonds with a par value of $100,000. The market rate when the bonds were issued was 6.5%. The company received $101,137 cash for the bonds. Using the effective interest method, the amount of recorded interest expense for the first semiannual interest period is:

• A) $3,500.00.
• B) $7,000.00.
• C) $3,286.95.
• D) $6,573.90.
• E) $1,750.00.

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Definitions:

Glucose

A simple sugar that is an important source of energy and a metabolic intermediate.

Richest Source

A term denoting the most abundant or concentrated supply of a particular resource or substance.

Energy

The capacity to do work or produce change, existing in various forms such as kinetic, potential, thermal, electrical, chemical, and nuclear.

Triglycerides

A type of fat found in the blood, made up of a molecule of glycerol combined with three fatty acids, used by the body for energy.