Question

A company issued.. A company issued 10-year, 6.00% bonds with a face value of $100,000. The company received $97,767 for the bonds. Using the straight-line method of amortization, the amount of interest expense for the first interest period is:________.a) $2.233.00 b) $5,776.70 c) $6,000.00 d) $6,223.30

Answer 1

d) $6,223.30

Step-by-step explanation:

Interest payable in cash = 100000*6% = $6000

Amortization of bond discount (Straight line) = Discount in issue of bond / number of years

Amortization of bond discount = (100000 - 97,767) / 10

Amortization of bond discount = 2233 / 10

Amortization of bond discount = 223.3

Amount of interest Expense = 6000 + 223.3

Amount of interest Expense = $6,223.30