Effective-interest method-what is amount of interest revenue

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Reference no: EM13826858

On January 3, 2014, Moss Company acquires $300,000 of Adam Company’s 10-year, 10% bonds at a price of $319,254 to yield 9%. Interest is payable each December 31. The bonds are classified as held-to-maturity.

Assuming that Moss Company uses the effective-interest method, what is the amount of interest revenue that would be recognized in 2015 related to these bonds?

a. $30,000

b. $31,925

c. $28,734

d. $28,619

Assuming that Moss Company uses the straight-line method, what is the amount of premium amortization that would be recognized in 2016 related to these bonds?

a. $1,925

b. $1,266

c. $1,380

d. $1,506

Reference no: EM13826858

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