Effective interest method-amount of discount, Accounting Basics

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Effective interest method-amount of discount

On July 1, 2010, Navarre Corporation issued bonds with a face value of $100,000 and 12% interest payable semiannually. The bonds mature on June 30, 2015. The market rate of interest at the time of issuance was 14%, so the bonds were issued at a discount of $7,054. Using the effective interest method, the amount of discount that should be amortized by Navarre on December 31, 2010, is:

Select one:

a. $493.75

b. $506.26

c. $423.21

d. $702.35

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Accounting Basics: Effective interest method-amount of discount

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Accounting Basics: Effective interest method-amount of discount

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Recent Questions Asked Accounting Basics

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Accounting Basics: Effective interest method-amount of discount

Reference No:- TGS046036

Recent Questions Asked Accounting Basics

Q : Interest expense on a bond sold at a discount

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Q : How much cash was received in accrued interest

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