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How much would interest expense from these bonds

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Question 1 - 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 effective interest 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?

a. $4,774

b. $2,274

c. $226

d. $2,500

Question 2 - On July 31, 2018, Snowday Corporation issued $100,000, 5%, 20-year bonds for $88,443 when the market interest rate was 6%. The bonds pay semi-annual interest on July 31 and January 31. Snowday uses the effective interest 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 Snowday's financial statements for the year ended January 31, 2019?

a. $2,500

b. $5,153

c. $153

d. $2,653

Reference no: EM133130292

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