Question

On December 1 Spearmint, Incorporated, issued $450,000 of 9 percent, 3-year bonds for cash of $461,795. The bonds pay interest semiannually. The total cost of borrowing equals O $109,705 O $121,500 O $450,000 O $461,795

Name: on december 1 spearmint incorporated issued 450000 of 9 percent 3 year bonds for cash of 461795 the bonds pay interest semiannually the total cost of borrowing equals o 109705 o 121500 o 450 46007
Uploaded: 2023-10-03T18:51:01-08:00
Duration: 2 min 18 s
Channel: Rabia Sarwar
Description: on december 1 spearmint incorporated issued 450000 of 9 percent 3 year bonds for cash of 461795 the bonds pay interest semiannually the total cost of borrowing equals o 109705 o 121500 o 450 46007

          On December 1 Spearmint, Incorporated, issued $450,000 of 9 percent, 3-year bonds for cash of $461,795. The bonds pay interest semiannually. The total cost of borrowing equals
O $109,705
O $121,500
O $450,000
O $461,795

on december 1 spearmint incorporated issued 450000 of 9 percent 3 year bonds for cash of 461795 the bonds pay interest semiannually the total cost of borrowing equals o 109705 o 121500 o 450 46007

Added by Sara S.

Horngren’s Cost Accounting

Srikant M. Datar, Madhav V. Rajan 16th Edition

Instant Answer

Solved by Expert Rabia Sarwar

10/03/2023

Step 1

The bonds have a face value of $450,000 and a stated interest rate of 9% per year. Since the interest is paid semiannually, the interest payment each period is: $$ \frac{0.09}{2} \times 450,000 = 0.045 \times 450,000 = 20,250 $$ The bonds have a term of 3 years, Show more…

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On December 1 Spearmint, Incorporated, issued $450,000 of 9 percent, 3-year bonds for cash of $461,795. The bonds pay interest semiannually. The total cost of borrowing equals O $109,705 O $121,500 O $450,000 O $461,795