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.

Question

Lilian West

Business

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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Answers (2)

Know the Answer?

Rudy Shaw · Answer 1

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

Mora · Answer 2

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