On January 1, 2019, when the market rate for the bond interest was 14%, Lenoir Corporation issued bonds in the face amount of $ 500,000 with interest payable at 12% semiannually. The bonds mature on December 31, 2026, and were issued at a discount of $53, 180. How much of the discount should be amortized by the effective interest method at July 1, 2019? options: a)$ 3, 191 b)$ 2,659 c)$ 1,277 d)S 3,723
On January 1, 2019, when the market rate for the bond interest was 14%, Lenoir Corporation issued bonds in the face amount of $ 500,000 with interest payable at 12% semiannually. The bonds mature on December 31, 2026, and were issued at a discount of $53, 180. How much of the discount should be amortized by the effective interest method at July 1, 2019? options: a)$ 3, 191 b)$ 2,659 c)$ 1,277 d)S 3,723
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter13: Investments And Long-term Receivables
Section: Chapter Questions
Problem 1RE
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Step 1: Define bonds payable
VIEWStep 2: Issue price of bonds (carrying value of bonds on date of issuance)
VIEWStep 3: Cash interest payment on July 1, 2019
VIEWStep 4: Interest expense on July 1, 2019
VIEWStep 5: Amortization of discount on July 1, 2019 using the effective interest method
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