Question
1. HNE Inc., issued bonds for $104,000 on January 1, 2018. The bonds had a face value of $100,000 and paid interest annually at 9%.
1.
HNE Inc., issued bonds for $104,000 on January 1, 2018. The bonds had a face value of $100,000 and paid interest annually at 9%. The market rate on the date of issue was 8%. The first interest payment is on December 31, 2018, and HNE, Inc. prepares annual financial statements at 12/31 each year. How much interest expense will HNE, Inc. recognize in 2018 related to these bonds?
1. | 8,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2. | 8,320 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
3. | 9,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
4. | 9,360 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
5. | None of the above
2. HNE Inc., issued bonds for $104,000 on January 1, 2018. The bonds had a face value of $100,000 and paid interest annually at 9%. The market rate on the date of issue was 8%. The first interest payment is on December 31, 2018, and HNE, Inc. prepares annual financial statements at 12/31 each year. What will be the carrying value of the bond on the 12/31/2018 balance sheet?
|
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started