On January 1, 20X1, Perkins issued $100,000 face, 8%, 5-year bonds at $92,278. The bonds pay interest annually and were priced to yield 10%. Using the effective-interest method, how much is interest expense for 20X1?
Interest expenses are kinda financial expenses that are related to the fund's loan taken and this will be reported in the debit side of the income statement.
Answer and Explanation:
Calculation of Interest Expenses:
|Interest expense||Face value Interest rate||$100,000 8%||$8,000|
|So the correct answer to this question is option C.|
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from Financial Accounting: Help and ReviewChapter 5 / Lesson 18