Question
Ramzi corp. issued $6,000,000 of 8% debentures on May 1, 2006 and received cash totaling $5,323,577. The bonds pay interest semiannually on May 1 and
Ramzi corp. issued $6,000,000 of 8% debentures on May 1, 2006 and received cash totaling $5,323,577. The bonds pay interest semiannually on May 1 and November 1. The maturity date on these bonds is November 1, 2014. The firm uses the effective-interest method of amortizing discounts and premiums. The bonds were sold to yield an effective-interest rate of 10%.
Calculate the amount of discount amortization during the first year (5/1/06 through 4/30/07) these bonds were outstanding. (round to the nearest dollar.)
a. | discount amortization is $ 53,067 | |
b. | discount amortization is $ 52,067 | |
c. | discount amortization is $ 52,667 | |
d. | discount amortization is $ 53,667 |
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