On January 1, Year 1, Worthy Co. issued $1,000,000 of bonds payable. The bonds mature in five years on December 31, Year 5, and pay 9% interest once a year on December 31. The issue sold for $891,857 to yield 12%. Worthy uses the effective interest method. What is the amount of the liability at December 31, Year 2, after the second interest payment? a. $1,000,000
b. $931,590
c. $908,880

$927,946

Explanation:

journal entry to record bond issuance:

Dr Cash 891,857

Dr Discount on bonds payable 108,143

    Cr Bonds payable 108,143

amortization of bond discount = ($891,857 x 12%) - $90,000 = $17,023

bond's carrying value at the end of year 1 = $908,880

amortization of bond discount = ($908,880 x 12%) - $90,000 = $19,066

bond's carrying value at the end of year 1 = $927,946

hi : ) i found this so i hope this !

"we first find value of tax in dollars.

the difference between the two prices   is: 23. 54 - 22 = 1.54

therefore the sales tax in dollars is 1.54

the tax % will be   (amount of tax / original cost price ) × 100

(1.54 / 22) × 100  → (0.07) × 100 =   7

so the tax rate is 7%

we can double check the answer.

7 % of 22   → (7/100) × 22 → 0.07 × 22 = 1.54

22 + 1.54 = 23.54"

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