Question
On July 1, 2020, ABD issued bonds with a principal (maturity value) of $ 100,000 for a total of $ 99,233, which includes $ 4,000
On July 1, 2020, ABD issued bonds with a principal (maturity value) of $ 100,000 for a total of $ 99,233, which includes $ 4,000 of accrued interest (accrued interest) from March 1 (issue date) through July 1, 2020. On the issuance date, the company recorded the accrued interest with a credit to the interest payable account. The contractual interest rate is 12% and the effective interest rate is 14%. The bonds pay interest every March 1 and on September 1. The company uses the effective interest method to account for its bonds. How much will the interest expense account be debited on September 1, 2020? (approximately)
a. $2,666
b. $1,111
c. $2,222
d. $2,000
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