Asked by
Monish Palisetti
on Dec 06, 2024
Verified
On May 1, 2010, Potter, Inc., issued $30, 000 of ten-year, 12% bonds payable dated January 1, 2010.The cash received amounted to $29, 808.The bonds pay interest semiannually.Potter's fiscal year ends on June 30, 2010.What amount of interest expense should be reported on the income statement prepared on June 30, 2010, assuming straight-line amortization?
A) $624.00
B) $669.60
C) $549.60
D) $609.60
Straight-Line Amortization
A method of allocating the cost of an intangible asset evenly over its useful life.
Fiscal Year
A fiscal year is a 12-month period used for accounting purposes and preparing financial statements, differing from a calendar year.
Bonds Payable
A liability account in a company's balance sheet representing the amount it owes on issued bonds that have not yet been repaid.
- Ascertain and record in the accounts the processes of bond issuance, interest expense recognition, and bond amortization.
- Assess the impact of bond transactions on financial records.
Verified Answer
JA
Learning Objectives
- Ascertain and record in the accounts the processes of bond issuance, interest expense recognition, and bond amortization.
- Assess the impact of bond transactions on financial records.