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Cramer Company Sold Five-Year,8% Bonds on October 1,2016

Question 1

Multiple Choice

Cramer Company sold five-year,8% bonds on October 1,2016.The face amount of the bonds was $100,000,while the issue price was $102,000.Interest is payable on April 1 of each year.The fiscal year of Cramer Company ends on December 31.How much interest expense will Cramer Company report in its December 31,2016,income statement (assume straight-line amortization) ?


A) $ 2,000.
B) $ 1,900.
C) $ 1,778.
D) $ 2,040.

Correct Answer:

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