You are the new controller for Moonlight Bay Resorts. The company CFO has asked you to determine
Question:
1. On July 1, 2018, Moonlight Bay issued bonds with a face amount of $2,000,000. The bonds mature in 20 years and interest of 9% is payable semiannually on June 30 and December 31. The bonds were issued at a price to yield investors 10%. Moonlight Bay records interest at the effective rate.
2. At December 31, 2017, Moonlight Bay had a 10% installment note payable to Third Mercantile Bank with a balance of $500,000. The annual payment is $60,000, payable each June 30.
3. On January 1, 2018, Moonlight Bay leased a building under a finance lease calling for four annual lease payments of $40,000 beginning January 1, 2018. Moonlight Bay's incremental borrowing rate on the date of the lease was 11% and the lessor's implicit rate, which was known by Moonlight Bay, was 10%.
Required:
Calculate interest expense for the year ended December 31, 2018?
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Related Book For
Intermediate Accounting
ISBN: 9781259722660
9th Edition
Authors: J. David Spiceland, James Sepe, Mark Nelson, Wayne Thomas
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