McDougal Company sold a $500,000, 5-year, 9%APR bond issue on January 1, 2014 for a selling price of $480,700. The bonds pay interest semiannually on June 30 and December 31. The effective rate is 10% APR. McDougal incurred bond issue costs of $15,000 and uses the straight-line method to amortize deferred costs. McDougal considers amortization of bond issue costs as part of bond interest expense. (For deferred costs, it was determined that there are no material differences between using the straight-line and effective interest methods of amortization.)

Determine Bond Interest Expense for the year ended December 31, 2014:

$48,070

$48,147

$51,070

$51,147

 

 

1. Sparky Corporation has an employee benefit plan for compensated absences that gives each employee 15 paid vacation days per year. Vacation days can be carried over indefinitely. Employees can elect to receive payment in lieu of vacation days. At December 31, 2013, Sparky determined that there were 200 total vacation days earned but not taken as of year end. Of these 200 days, 180 days had been earned in 2013, and 20 days had been carried over from 2012. Sparky's employees earned an average wage rate of $15 per hour in 2012 and $17.50 per hour in 2013. Each employee works 8 hours per day. In its December 31, 2013 balance sheet, what amount of liability for compensated absences is Sparky required to report?
2. $0
3. $24,000
4. $27,600
5. $28,000