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On January 1, 20X8, Glen Allen Company issued $200,000 in term bonds with a 5-year term. The stated rate of interest was 6% and the effective rate of interest was 7%. What is the amount of interest expense
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25 votes
25 votes
On January 1, 20X8, Glen Allen Company issued $200,000 in term bonds with a 5-year term. The stated rate of interest was 6% and the effective rate of interest was 7%. What is the amount of interest expense to be recorded on December 31, 20X8?

User Charles Thomas
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1 Answer

20 votes
20 votes

Answer:

The answer is $13,425.97

Step-by-step explanation:

The answer is $13,425.97

Using Financial calculator (TEXAS BA II PLUS)

N = 5 years

i = 7 percent

FV = $200,000

PMT = $12,000

PV = $191,799.61

Therefore interest expense is $191,799.61 x 7%

= $13,425.97

User Gregir
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2.9k points
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