12. When interest expense is calculated using the effective-interest amortization method, interest expense (assuming that interest is paid annually) always equals thea.actual amount of interest paid.b.book value of the bonds multiplied by the stated interest rate.c.book value of the bonds multiplied by the effective interest rate.d.maturity value of the bonds multiplied by the effective interest rate. 13. On July 1, 2002, TJR issued 2,000 of its 8 percent, $1,000 bonds for $1,752,000. The bonds were issued to yield 10 percent. The bonds are dated July 1, 2002, and mature on July 1, 2012. Interest is payable semiannually on January 1 and July 1. Using the effective-interest method, how much of the bond discount should be amortized for the six months ended December 31, 2002?a.$15,200b.$12,400c.$9,920d.$7,600

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Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

Chapter9: Long-term Liabilities

Section: Chapter Questions

Problem 7MCQ

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12.

When interest expense is calculated using the effective-interest amortization method, interest expense (assuming that interest is paid annually) always equals the

a.	actual amount of interest paid.
b.	book value of the bonds multiplied by the stated interest rate.
c.	book value of the bonds multiplied by the effective interest rate.
d.	maturity value of the bonds multiplied by the effective interest rate.

13.

On July 1, 2002, TJR issued 2,000 of its 8 percent, $1,000 bonds for $1,752,000. The bonds were issued to yield 10 percent. The bonds are dated July 1, 2002, and mature on July 1, 2012. Interest is payable semiannually on January 1 and July 1. Using the effective-interest method, how much of the bond discount should be amortized for the six months ended December 31, 2002?

a.	$15,200
b.	$12,400
c.	$9,920
d.	$7,600

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