Question

# On January 1, a company issues bonds dated January 1, 2018 with a par value of...

On January 1, a company issues bonds dated January 1, 2018 with a par value of \$300,000. The bonds mature in 5 years. The contract rate is 9%, and interest is paid annually on December 31. The bonds are sold for \$312,200. The journal entry to record the first interest payment using straight-line amortization is:

Muheet Corporation issues \$550,000, 10%, 5-year bonds on January 1, 2019 for \$489,000. Interest is paid annually on January 1. If Muheet Corporation uses the straight-line method of amortization of bond discount, the amount of interest expense recorded at December 31, 2019 would be:
Select one:
a. \$55,000.
b. \$42,800.
c. \$61,000.
d. \$67,200.

Solve quickly I get you two UPVOTE directly
Thank's
Abdul-Rahim Taysir

 1] 31-Dec Interest expense \$            24,560 Premium on bonds payable [12200/5] \$              2,440 Cash [300000*9%] \$          27,000 [To record payment of first interest] 2] MUTHEET CORPORATION: Coupon payment = 550000*10% = \$            55,000 Add: Discount amortized = (550000-489000)/5 = \$            12,200 Interest expense \$            67,200 Answer: [d] \$67,200

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