5. The long-term debt section of Holt Company's statement of financial position on December 31, 2010 included a 5-year 7% bonds payable of P3,000,000 less unamortized discount of P111,529.97. Further examination revealed that these bonds were issued to yield 6% (before bond issue costs). The amortization of bond discount was recorded using the effective interest method. Interest was paid on January 1 and July 1 of each year. If the bonds were issued on July 1, 2010? a. What is the effective interest rate used? b. How much bond issue costs were incurred on July 1, 2010? c. How much was interest expense for 2010?
5. The long-term debt section of Holt Company's statement of financial position on December 31, 2010 included a 5-year 7% bonds payable of P3,000,000 less unamortized discount of P111,529.97. Further examination revealed that these bonds were issued to yield 6% (before bond issue costs). The amortization of bond discount was recorded using the effective interest method. Interest was paid on January 1 and July 1 of each year. If the bonds were issued on July 1, 2010? a. What is the effective interest rate used? b. How much bond issue costs were incurred on July 1, 2010? c. How much was interest expense for 2010?
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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