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Question
Designer Company issued 10-year bonds on January 1. The 6% bonds have a face value of $800,000 and pay interest every January 1 and July 1. The bonds were sold for $690,960 based on the market interest rate of 8%. Designer uses the effective interest rate method to amortize bond discounts and premiums. On July 1 of the first year, Designer should record an interest expense (rounded to the nearest dollar) of
a. $27,638
b. $24,000
c. $48,000
d. $55,277
Answer
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