Question
[The following information applies to questions 3-6 displayed below.] Kruse Corporation holds 60 percent of the voting common shares of Garys Ice Cream Parlors. On
[The following information applies to questions 3-6 displayed below.] |
Kruse Corporation holds 60 percent of the voting common shares of Garys Ice Cream Parlors. On January 1, 20X6, Garys purchased $50,000 par value, 10 percent first mortgage bonds of Kruse from Cane for $58,000. Kruse originally issued the bonds to Cane on January 1, 20X4, for $53,000 (assuming a market interest rate of 9.074505%). The bonds have a 10-year maturity from the date of issue and pay interest semiannually on June 30th and December 31st. |
Garys reported net income of $20,000 for 20X6, and Kruse reported income (excluding income from ownership of Garys stock) of $40,000. |
3. | What amount of interest expense does Kruse record for 20X6? (Do not round your intermediate calculations. Round your final answer to nearest whole dollar) |
$4,805.
$4,756.
$4,767.
$4,777.
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