Clio Co. issued 5-year $500,000 debenture bonds on January 2. The bonds pay interest semiannually. Clio uses the effective interest method to amortize bond premiums and discounts. The carrying value of the bonds on January 2 was $337,806. A journal entry was recorded for the first interest payment on June 30, debiting interest expense for $13,512 and crediting cash for $15,000. What is the annual stated interest rate for the debenture bonds?
a. 4%
b. 3%
c. 8%
d. 6%
Acheron Co.’s December 31, 20X13 balance sheet contained the following items in the long-term liabilities section:
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Unsecured
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5.375% registered bonds ($25,000 maturing annually beginning in 20X17)
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$550,000
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6.5% convertible bonds, callable beginning in 20X20, due 20X33
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$225,000
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Secured
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4.875% guaranty security bonds, due 20X33
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$500,000
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5.0% commodity backed bonds
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($50,000 maturing annually beginning in 20X18)
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$150,000
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What are the total amounts of term bonds and debenture bonds?
Term bonds Debenture bonds
a. $700,000 $375,000
b. $725,000 $375,000
c. $725,000 $775,000
d. $700,000 $775,000