Question
In: Accounting
Trego Company issued, on December 31, 2018, $1,000,000 face value, 4%, 5-year bonds. Interest will be...
Trego Company issued, on December 31, 2018, $1,000,000 face value, 4%, 5-year bonds. Interest will be paid semiannually each June 30 and December 31. The bonds sold at a price of 102; Trego uses the straight-line method of amortizing bond discount or premium. The amount of bond interest expense recognized by Trego Company in 2019 with respect to these bonds is
Solutions
Expert Solution
| Bond issue price | 1020000 | =1000000*1.02 |
| Premium on issue | 20000 | =1020000-1000000 |
| Cash interest paid in 2019 | 40000 | =1000000*4% |
| Less: Premium amortized in 2019 | 4000 | =20000/5 |
| Interest expense recognized in 2019 | 36000 |
ekkarill92 answered 3 years agoRelated Solutions
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