On January 1, 2021, Nevada Corporation issued 8% bonds with a face value of $10,000,000. The bonds sold for $11,487,747. They mature in ten years and pay interest semiannually on June 30^th and December 31^st. The market rate of interest at the time the bonds were issued was 6%. Nevada uses the effective interest method for amortizing bond discounts and premiums.

9. Total interest expense Nevada would report on its income statement for the year ended December 31, 2021, relative to these bonds is closest to:

a) $800,000

b) $600,000

c) $689,265

d) $687,603

10. Total interest paid by Nevada on these bonds for the year ended December 31, 2021, is closest to:

a) $800,000

b) $600,000

c) $689,265

d) $687,603

Answer rating: 100% (QA)

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