Question
Use the following information to answer the next three questions. On January 1, 2017, Kerns Company issued a $20,000 face value bond that sold for
Use the following information to answer the next three questions.
On January 1, 2017, Kerns
Company issued a $20,000 face value bond that sold for 110. The bond had a ten-year term and
a stated annual interest rate of 8%. The straight-line method of amortization is used.
5.
The carrying value of the bond liability on January 1, 2017, would be
a. $22,000.
b. $20,000.
c. $21,800.
d. $20,200.
6.
The amount of interest expense reported on the companys 2017 income statement would be
a. $1,200.
b. $1,600.
c. $1,400.
d. $1,050.
7.
The amount of interest expense reported on the companys 2018 income statement would be
a. $1,600.
b. $1,400.
c. $1,800.
d. $2,000.
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