1//

A company issued $290,000 5-year, 5.75% bonds and received $293,303 in cash. The market rate of interest when the bonds were issued was 5.25%. What is the amount of interest expense to be recorded for the first annual interest period if the company uses the effective-interest method of amortization?

$15,225.00

$15,398.41

$16,675.00

$16,864.92 2//

On January 1, your company issues a 5-year bond with a face value of $10,000 and a stated interest rate of 7%. The market interest rate is 5%. The issue price of the bond was $10,986. Your company used the effective-interest method of amortization. At the end of the first year, your company should:

debit Interest Expense for $549, debit Premium on Bonds Payable for $151, and credit Interest Payable for $700.

debit Interest Expense for $549 and credit Interest Payable for $549.

debit Interest Expense for $700, debit Premium on Bonds Payable for $151, and credit Interest Payable for $549.

debit Interest Expense for $700, credit Premium on Bonds Payable for $151, and credit Interest Payable for $549.

3//

On January 1, your company issues a 5-year bond with a face value of $10,000 and a stated interest rate of 7%. The market interest rate is 5%. The issue price of the bond was $10,946. Using the effective-interest method of amortization and rounding to the nearest dollar, the interest expense for the first year ended December 31 would be:

	$500.00.
	$547.30.
	$766.22.
	$700.00.