On January 1, 2016, Tonika Company issued a seven-year, $10,000, 6% bond. The interest is payable annually each December 31. The issue price was $9,461 based on an 7% effective interest rate. Tonika uses the effective-interest amortization method.
The interest expense on the income statement for the year ended December 31, 2016 is closest to:
$9,587.
$662.
$9,676.
$9,621.
On January 1, 2016, Tonika Company issued a six-year, $10,000, 9% bond. The interest is payable annually each December 31. The issue price was $9,565 based on an 10% effective interest rate. Tonika uses the effective-interest amortization method.
The book value of the bonds as of December 31, 2016 is closest to:
rev: 10_08_2016_QC_CS-64487
$57.
$8,665.
$9,508.
$9,622.