Effective interest method for amortizing bond discounts

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Reference no: EM131519659

Nevada Corporation issued ten thousand $1,000 bonds on January 1, 2017 for $11,487,747. The bonds carry a stated rate of interest of 8%, mature in ten years, and pay interest semiannually on June 30th and December 31st . The market rate of interest at the time the bonds were issued was 6%. Nevada uses the effective interest method for amortizing bond discounts and premiums.

5. Total interest expense Nevada would report on its income statement for the year ended December 31, 2017 relative to these bonds is closest to: A) $800,000 B) $600,000 C) $689,265 D) $687,603

6. Total interest paid by Nevada on these bonds for the year ended December 31, 2017 is closest to: A) $800,000 B) $600,000 C) $689,265 D) $687,603

Reference no: EM131519659

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