On January 1, Pacer Corporation issued $2,000,000, 13%, 5-year bonds with interest payable on July 1 and January 1. The bonds sold for $2,197,080. The market rate of interest for these bonds was 11%. On the first interest date, using the effective-interest method, the debit entry to Interest Expense is for Select one: a. $260,000. b. $130,000. c. $142,810. d. $241,679. e. $120,839.

Option E, is correct as effective interest $ 120,839

Explanation:

The coupon interest payable semi-annually is computed thus:

Semi-annual coupon =13%/2*$2000000

                                  =$130,000

However the bond was issued at  premium, using effective interest the first interest payment is calculated on the actual issue value of the bond of $2,197,080 using the market rate of interest

effective interest=11%/2*$2,197,080

                           =$ 120,839.40  

Hence,the interest expense based on effective interest is  $120,839 rounded to the nearest whole number

Option D is wrong because the effective interest is a semi-annual interest not an annual one.

answer: b) the us is the leading importer but not the leading exporter.

extra info:

the u.s is the largest importer but it is not the largest exporter as china sits on the top of the table when it comes to leading exporters.

but u.s is not far from first,

they rank in 2nd globally as the worlds largest exporter.

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i think the answer to your question is b. directive