What Amount of Interest Expense, Excluding Amortization of the Bond

question 21

Multiple Choice

What amount of interest expense, excluding amortization of the bond discount, (if any) would have to be eliminated in 2017 as a result of the intercompany sale of the bonds?

• A) None.
• B) $12,000.
• C) $12,200.
• D)$14,400.

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Definitions:

Bad Debts

Accounts receivable that a company is unable to collect, often written off as an expense because they are considered irrecoverable.

Accounts Receivable

Money owed to a business by its clients for goods or services delivered but not yet paid for.

Bad Debts

Amounts owed to a company that are not expected to be received, often due to the debtor being unable to pay. These are often written off as an expense.