A Company Issued Seven-Year,8% Bonds with a Par Value of $200,000.The

question 30

Multiple Choice

A company issued seven-year,8% bonds with a par value of $200,000.The market rate when the bonds were issued was 5.5%.The company received $203,010 cash for the bonds.Using the straight-line method,the amount of recorded interest expense for the first semiannual interest period is:

• A)$8,000
• B)$8,215
• C)$7,785
• D)$16,000
• E)$4,990

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Definitions:

Compounded Annually

Interest on an investment or loan calculated once a year, where the interest is added to the principal.

9-Year

An undefined term likely referring to a period or duration of nine years.

Compounded Quarterly

This refers to the process where interest is calculated and added to the principal sum of an investment or loan on a quarterly basis.

12%

A representation of twelve parts in a hundred, often used to describe interest rates, growth percentages, or discounts.