Juneau Company issued 5year 360000 face value bonds at 95 on

Juneau Company issued 5-year $360,000 face value bonds at 95 on January 1, 2014. The stated interest rate on these bonds is 10%. If the effective interest rate is 10.40%, interest expense in 2014 is equal to

Juneau Company Issued 5-year $360,000 face value bonds at 95 on January 1, 2014. The stated intere 2014 is equal to o $34,200. o $36,000. $37,440. o $35,568

The Interest Expense in 2014 is equal to “$35,568”

Under Effective interest method of amortization, The Bond Interest Expenses can be calculated by multiplying the Effective Interest rate with the carrying value of the Bond

Carrying Value of the Bond = $360,000 x 0.95 = $ 342,000

Therefore, Bond Interest Expense for 2014 = Carrying Value of the Bond x Effective Interest Rate

= $342,000 x 10.40%

= $35,568

Juneau Company issued 5-year $360,000 face value bonds at 95 on January 1, 2014. The stated interest rate on these bonds is 10%. If the effective interest rate

Juneau Company issued 5year 360000 face value bonds at 95 on

Solution

Get Help Now

Submit a Take Down Notice