Effective Interest Amortization of Bond Premium or Discount Video Lessons

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Problem: A $100,000, 10-year, 8% bond that pays interest semiannually was sold for $87,539 when the market rate of interest was 10%. Using the effective-interest method, determine how much of the bond discount would be credited to Discount on Bonds Payable at the end of the first interest period? A) $377 B) $754 C) $2,000 D) $4,377

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Problem Details

A $100,000, 10-year, 8% bond that pays interest semiannually was sold for $87,539 when the market rate of interest was 10%. Using the effective-interest method, determine how much of the bond discount would be credited to Discount on Bonds Payable at the end of the first interest period?

A) $377

B) $754

C) $2,000

D) $4,377

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