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Homework answers / question archive / On January 1, Pacer Corporation issued $2000000, 13%, 5-year bonds with interest payable on January 1
Answer:
The correct option is D
Explanation:
Interest expense is to be computed on the bond selling amount or value. So,
The amount of interest expense would be:
Interest expense = Sold Value of bond × Rate of Interest
= $2,197,080 × 11%
= $241,679
On December 31, the method of effective interest is used, then the debit entry to the Interest expense amounts to $241,679.