On July 31, 2018, Hummbug Corporation issued $100,000, 5%, 20-year bonds for $113,678 when the market interest rate was 4%. The bonds pay semi-annual interest on July 31 and January 31. Hummbug uses the straight- line method to amortize its bond discount or premium, and it has a January 31 year-end. How much would interest expense from these bonds be recorded in Hummbug's financial statements for the year ended January 31, 2019? Select one: a. $2,158.05 b. $4,658.05 C. $2,500 d. $5,000

Principles of Accounting Volume 1
19th Edition
ISBN:9781947172685
Author:OpenStax
Publisher:OpenStax
Chapter13: Long-term Liabilities
Section: Chapter Questions
Problem 2PA: On July 1, Somerset Inc. issued $200,000 of 10%, 10-year bonds when the market rate was 12%. The...
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On July 31, 2018, Hummbug Corporation issued $100,000, 5%, 20-year bonds for $113,678 when the market
interest rate was 4%. The bonds pay semi-annual interest on July 31 and January 31. Hummbug uses the straight-
line method to amortize its bond discount or premium, and it has a January 31 year-end. How much would interest
expense from these bonds be recorded in Hummbug's financial statements for the year ended January 31, 2019?
Select one:
a. $2,158.05
b. $4,658.05
C. $2,500
d. $5,000
Next page
37°F
e to search
DELL
Transcribed Image Text:On July 31, 2018, Hummbug Corporation issued $100,000, 5%, 20-year bonds for $113,678 when the market interest rate was 4%. The bonds pay semi-annual interest on July 31 and January 31. Hummbug uses the straight- line method to amortize its bond discount or premium, and it has a January 31 year-end. How much would interest expense from these bonds be recorded in Hummbug's financial statements for the year ended January 31, 2019? Select one: a. $2,158.05 b. $4,658.05 C. $2,500 d. $5,000 Next page 37°F e to search DELL
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