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Uses effective-interest amortization method

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Reference no: EM131520328

On January 1, 2016, Tonika Company issued a seven-year, $10,000, 6% bond. The interest is payable annually each December 31. The issue price was $9,461 based on an 7% effective interest rate. Tonika uses the effective-interest amortization method.

The interest expense on the income statement for the year ended December 31, 2016 is closest to:

$9,587.

$662.

$9,676.

$9,621.

On January 1, 2016, Tonika Company issued a six-year, $10,000, 9% bond. The interest is payable annually each December 31. The issue price was $9,565 based on an 10% effective interest rate. Tonika uses the effective-interest amortization method.

The book value of the bonds as of December 31, 2016 is closest to:

rev: 10_08_2016_QC_CS-64487

$57.

$8,665.

$9,508.

$9,622.

Reference no: EM131520328

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