The effective interest rate established by the market


Auerbach Inc. issued 6% bonds on October 1, 2013. The bonds have a maturity date of September 30, 2023 and a face value of $400 million. The bonds pay interest each March 31 and September 30, beginning March 31, 2014. The effective interest rate established by the market was 8%.

Assuming that Auerbach issued the bonds for $345,639,000, what would the company report for its net bond liability balance after its first interest payment on March 31, 2014, rounded up to the nearest thousand?

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Accounting Basics: The effective interest rate established by the market
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