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What is the carrying amount of the bonds payable on december

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Reference no: EM132873323

On January 1, 2020, an entity issued 10-year bonds with face amount of 5,000,000 for 5,775,000. The entity paid bond issue cost of 100,000 on same date. The stated interest rate on the bonds is 10% payable annually every December 31. The bonds have an 8% yield per annum after considering the bond issue cost. The entity used the effective interest method of amortizing bond premium.

Question 1: What is the interest expense for 2021?

a. 454,000

b. 458,960

c. 500,000

d. 450,320

Question 2: What is the carrying amount of the bonds payable on December 31, 2021?

a. 5,695,960

b. 5,579,320

c. 5,629,000

d. 5,737,000

Reference no: EM132873323

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