ABC Company received $9,631 for its 5-year,10% bonds with a total face value of $10,000.The market rate of interest was 11%.The bonds pay interest annually on December 31.How much interest expense will ABC Corporation record on the first annual interest payment date using the effective-interest method?
A)$1,059.41
B)$1,000
C)$1,100
D)$963.10

Question

Quizplus · Accepted Answer

Interest expense = Carrying value × Market interest rate
= $9,631 × 0.11 = $1,059.41

ABC Company Received $9,631 for Its 5-Year,10% Bonds with a Total