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Gammell Company issued $50,000 of 9% bonds with annual interest payments. The bonds mature in ten years. The bonds were issued at $48,000. Gammel Company
Gammell Company issued $50,000 of 9% bonds with annual interest payments. The bonds mature in ten years. The bonds were issued at $48,000. Gammel Company uses the straight-line method of amortization. Which of the following statements is incorrect? The annual increase in the bond book value is $200. The annual interest expense exceeds the annual cash interest payment by $200. The market rate of interest exceeded the stated rate of interest when the bonds were issued. The annual interest expense is $4,300.
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