On July 1, 2019, Garden Works, Inc. issued $300,500 of ten-year, 7% bonds for $305,500. The bonds
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On July 1, 2019, Garden Works, Inc. issued $300,500 of ten-year, 7% bonds for $305,500. The bonds were dated July 1, 2019, and semi-annual interest will be paid each December 31 and June 30. Garden Works Inc. uses the straight-line method of amortization. Which of the following statements is incorrect?
The interest expense during the life of the bonds is $5,000 less than the cash interest payments during the life of the bonds.
The book value of the bond liability decreases by $500 per year.
The semi-annual interest expense is $500 less than the semi-annual interest payment.
The market rate of interest was less than the coupon rate of interest on July 1, 2019.
Related Book For
Intermediate Accounting
ISBN: 978-0077400163
6th edition
Authors: J. David Spiceland, James Sepe, Mark Nelson
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