Tan Corporation issued $600,000,000 of 7% bonds on November 1, 2015, for $644,636,000. The bonds were dated November 1, 2015, and mature in 10 years, with interest payable each May 1 and November 1. The effective-interest rate is 6%. Prepare Tan’s December 31, 2015, adjusting entry. Use effective rate method of amortization

Interest Expense $6,446,360

Interest Payable $7,000,000

Explanation:

Interest Expense for the year =

Issued amount * Effective interest rate *

$644,636,000 * 0.06 * 2/12 = $6,446,360

Interest Payable =

Face Value of the bond * Interest rate *

$600,000,000 * 0.07 * 2/12 = 7,000,000

the investment was $14,174.196

explanation:

a lump sum means that the father of the example made one deposit and leave it be.

we need to know the value of a capital that generated at 4.05% per year during 28 years the sum of $48,613.24

now clearing the formula to solve for capital we got:

and we reach the answer investment = $14,174.20