On January 1,2010,Jacob issues $800,000 of 9%,13-year bonds at a price of 96½.Six years later,on January 1,2016,Jacob retires 20% of these bonds by buying them on the open market at 105½.All interest is accounted for and paid through December 31,2015,the day before the purchase.The straight-line method is used to amortize any bond discount. What is the total interest expense for the life of the bond?
A)$936,000
B)$964,000
C)$936,000.
D)$772,000
E)$844,000

Question

Quizplus · Accepted Answer

Cash paid: (800,000*.09) = 72,000*13 = 936,000 + Disc. 28,000 = 964,000

On January 1,2010,Jacob Issues $800,000 of 9%,13-Year Bonds at a Price