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3) Novastar Corporation issued 2,000 of its 1,000, 10% ten-year bonds dated July 1, Year 1, at a time when the market paid 9% for
3) Novastar Corporation issued 2,000 of its 1,000, 10% ten-year bonds dated July 1, Year 1, at a time when the market paid 9% for bonds of similar risk. Interest is payable annually. The bonds were properly carried at $2,134,000 upon issue. On its December 31, Year 1 financial statements, Novastar Corporation would display the following balances: Unamortized Accrued Interest Interest Bonds Payable Premium Payable Expense A. $2,000,000 $126,060 $200,000 $192,060 B. $2,000,000 $130,030 $100,000 $ 96,030 C. $2,000,000 $141,940 $200,000 $192,060 D. $2,000,000 $137,970 $100,000 $ 96,030
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