On January 1, 2014, the Baker Corporation Issued 10% Bonds

question 164

Multiple Choice

On January 1, 2014, the Baker Corporation issued 10% bonds with a face value of $50,000. The bonds are sold for $46,000. The bonds pay interest semiannually on June 30 and December 31 and the maturity date is December 31, 2023. Baker records straight-line amortization of the bond discount. The bond interest expense for the year ended December 31, 2014, is

• A) $5,000
• B) $5,200
• C) $5,800
• D) $5,400

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Definitions:

Inventory Turnover

A metric indicating how many times a company's inventory is sold and replaced over a period, measuring efficiency in managing inventory.

Times Interest Earned

Times Interest Earned is a financial ratio that measures a company's ability to meet its debt obligations based on its operating income.

Debt to Assets Ratio

A financial ratio that indicates the percentage of a company's assets financed through debt, measuring financial leverage.

Current Ratio

A liquidity ratio measuring a company’s ability to pay short-term obligations with its short-term assets.