How much interest expense will be recognized


A company issues $5,000,000, 7.8%, 20-year bonds to yield 8% on January 1, 2010. Interest is paid on June 30 and December 31. The proceeds from the bonds are $4,901,036. Using effective-interest amortization, how much interest expense will be recognized in 2010?

a) $195,000

b) $390,000

c) $392,124

d) $392,083

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Accounting Basics: How much interest expense will be recognized
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