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23 November, 13:37

On January 1, Borge Inc. issued $3,000,000, 8% bonds for $2,817,000. The market rate of interest for these bonds is 9%. Interest is payable annually on December 31. Borge uses the effective-interest method of amortizing bond discount. At the end of the first year, Borge should report unamortized bond discount of Select one: a. $169,470. b. $153,000. c. $163,547. d. $164,700. e. $157,647.

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  1. 23 November, 13:50
    0
    At the end of the first year, Borge should report unamortized bond discount of a. $169,470.

    Explanation:

    Solution:

    Interest amount =

    ($2,817,000 * 0.09) - ($3,000,000 * 0.08)

    =$13,530

    Bond Disc. Amount; ($3,000,000 - $2,817,000) - $13,530

    = $183,000 - $13,530

    = $169,470
  2. 23 November, 13:50
    0
    A.$169,470

    Explanation:

    ($2,817,000 * 0.09) - ($3,000,000 * 0.08)

    =$253,530-$240,000

    =$13,530

    Bond Discount Amount;

    ($3,000,000 - $2,817,000) - $13,530

    = $183,000 - $13,530

    = $169,470

    Therefore Borge will report unamortized bond discount of $169,470
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Home » Business » On January 1, Borge Inc. issued $3,000,000, 8% bonds for $2,817,000. The market rate of interest for these bonds is 9%. Interest is payable annually on December 31. Borge uses the effective-interest method of amortizing bond discount.
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