On January 2,2017,Garage Master Construction,Inc

question 25

Multiple Choice

On January 2,2017,Garage Master Construction,Inc.issued $500,000,ten-year bonds for $574,540.The bonds pay interest on June 30 and December 31.The face rate is 8% and the market rate is 6%.The interest expense on the bonds at June 30,2017,is

• A)$2,764.
• B)$17,236.
• C)$20,000.
• D)$22,764.

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Definitions:

Depreciation

The accounting process of allocating the cost of a tangible asset over its useful life, reflecting wear and tear, age, or obsolescence.

Net Working Capital

The difference between a company's current assets and its current liabilities, indicating the short-term liquidity position.

Tax Rate

The rate designated by the state to collect taxes from the profits or income of individuals or firms.