(Solved):Q: On January 1, 20…

Question:

Question

On January 1, 2018 ABC Corporation issued a five-year $1,000,000, 8%, at $1,250,000. Interest is paid annually on December 31. The market rate of interest is 5%.

a) Using the effective interest rate method, what is the interest expense at December 31, 2018? Interest Expense at December 31,2018 = $___________________________

B)What is the carrying value of the bond at December 31, 2018? Carrying value

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