Question
Aggie Construction Company issued $200,000 of 9.5%, 5-year bonds on January 1, 2012. Interest is to be paid semi-annually on June 30 and December 31.
Aggie Construction Company issued $200,000 of 9.5%, 5-year bonds on January 1, 2012. Interest is to be paid semi-annually on June 30 and December 31. The market rate at the time of the bond issue was 10%; consequently the bonds were issued for $196,000. What is the total amount of interest expense that Aggie Construction will record over the five-year life of the bond inssue? (Please note: selling price of $196,000 has been rounded somewhat to make the calculations "less messy")
a. | $98,000 | |
b. | $99,000 | |
c. | $100,000 | |
d. | $295,000 | |
e. | none of the above |
Refer to the informaiton above pertaining to Aggie Construction Company. What amount will Aggie Company report as interest expense on the bonds for the first six months of 2012?
a. | $9,310 | |
b. | $9,800 | |
c. | $9,900 | |
d. | $10,000 | |
e. | none of the above |
Refer to the information above pertaining to Aggie Construction Company. What amount will Aggie Company report as the net liability for these bonds (that is, what is the bonds' carrying value) as of December 31, 2012?
a. | $196,000 | |
b. | $196,300 | |
c. | $196,615 | |
d. | $200,000 | |
e. | none of the above |
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access with AI-Powered 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